Bitcoin Halving Cuts Block Reward 50% to 3.125 BTC

The Bitcoin halving event in 2024 has significantly impacted the mining industry, as the block reward was reduced from 6.25 BTC to 3.125 BTC. This reduction in rewards has compelled miners to reassess their profitability and price trends moving forward. Even established mining companies like Marathon Digital and Galaxy Digital have shown cautious optimism, despite the increased operational costs in high-electricity areas.

The halving event, which occurred on April 20, 2024, reduced the block reward from 6.25 BTC to 3.125 BTC, effectively halving the rate of new Bitcoin generation from 900 BTC to 450 BTC per day. This reduction in supply is expected to help sustain prices in the long term, but it also means that miners lose half their revenue in one stroke. The Bitcoin mining community is already preparing for the next halving event in 2028, when the block reward will be further reduced to 1.5625 BTC per block. This upcoming cut-off will further tighten the trends for most miners who depend almost wholly on earning block rewards.

Many key miners have remained profitable through the halving due to their ultra-low energy costs and optimized mining rigs. For example, Marathon Digital's cost to mine one bitcoin is around $17,000, mainly due to strategic placements in low-cost energy zones. The company proactively tackles costs through power provider partnerships and moves activities to areas of energy surplus. History suggests a tendency for prices to rally eventually with decreased supply, following a typical path evidenced by previous halvings in 2012, 2016, and 2020.

In the current environment, mining companies are pushing toward innovation and efficiency. Next-gen ASICs like Bitmain’s S21, which deliver improved performance per watt, are now being embraced by corporations. Additionally, a considerable population of miners is now exploiting alternative energy strategies off-grid, hydro and waste gas flaring models commonly used by some North American firms, now all the way to dusted-out setups. Others are switching to Layer 2 or beginning data center operations as another means of income diversification. Analysts at Galaxy added recently that mining revenue would increasingly tend to feature transaction fees, which spiked recently on account of high on-chain activity, in the future, as earnings from on-chain transaction rewards continue to shrink with every halving.

Looking ahead to the 2028 halving, the Bitcoin prices are now reduced to 3.125 BTC for each block. There is already a countdown for the 2028 Bitcoin halving when the prizes will again be reduced to 1.5625 BTC per block. This up-and-coming cut-off will further tighten the trends for most miners who depend almost wholly on earning block rewards. They are already gearing up for the long haul, mining low-cost infrastructure, diversifying into other related industries, or participating in governance conversations about the future sustainability of Bitcoin. It would be such a point around which the 2028 halving could tip the scales to invert the transitions into an irreversible fee-based paradigm rather than a reward-focused model.

The upcoming 2028 Bitcoin halving event will create substantial economic changes in BTC mining operations, decreasing profitability while requiring miners to focus on increasing efficiency along with scale and innovative measures. Marathon Digital and Riot continue their fast transformation by using inexpensive power combined with powerful machines to remain profitable. Most individuals in mining put their money on long-term Bitcoin price growth based on reduced supply, but the forthcoming months bring significant short-term uncertainty.