TL;DR
-
Late last week, JP Morgan released a report on the upcoming April 2024 Bitcoin halving, calling it “a stress test for Bitcoin miners.”
-
In order for BTC miners to remain profitable, one of two things must happen: the value of each BTC must go up; whether the price of mining each BTC should fall (due to cheaper energy sources, better quality mining rigs, etc.).
-
The report went on to say that innovations such as Ordinals inscriptions on the Bitcoin network have generally been positive for the value of BTC, but more innovations are to come (similar to Vitalik’s predictions last week).
Full story
Late last week, JP Morgan released a report on the upcoming April 2024 Bitcoin halving.
They called the BTC halving event “a stress test for Bitcoin miners”.
Here’s what that means and why:
Every ~4 years, the rewards for mining BTC decrease by – you guessed it – half.
Since a steady supply of 21M BTC was once created, the “Bitcoin Halving Cycle” historically marked the beginning of a bull run.
(Demand + scarcity = people value it more).
But the key point in JP Morgan’s report is: there are real, fixed costs when it comes to actually mining BTC.
Electricity, hardware (e.g. mining rigs), and some human labor are all needed for BTC miners to be successful.
So for BTC miners to remain profitable, one of two things needs to happen – if both can happen, even better.
In other words, the value of each BTC must go up; whether the price of mining each BTC should fall (due to cheaper energy sources, better quality mining rigs, etc.).
The report went on to say that innovations such as Ordinals inscriptions on the Bitcoin network have generally been positive for the value of BTC, but more innovations are to come (similar to Vitalik’s predictions last week).
The BTC halving cycle is something magical.
Building scarcity into a currency, programmatically, is something that had never been done before the invention of BTC.
(In fact, the opposite was true, which has led to inflation over the years).
Let’s see how the mining companies react to the ‘stress test’ early next year!
