Bitcoin Halving Slashes Miner Revenues 50%

Bitcoin mining revenues have sharply declined since the April 2024 halving, with transaction fees now contributing only around 1.48% of block rewards. This significant drop has placed older miners in a precarious position, as their revenue streams have become critically low. The halving event, which reduces the block reward by half, has historically been a pivotal moment for the mining industry. However, the current scenario is exacerbated by the slide in fee income, which has traditionally supplemented the block rewards.

The reduction in transaction fees post-halving means that older mining equipment, which is less efficient and has higher operational costs, is struggling to remain profitable. Miners with outdated technology are finding it increasingly difficult to cover their expenses, let alone turn a profit. This situation is further complicated by the fact that newer, more efficient mining rigs are entering the market, making it even harder for older miners to compete.

The decline in mining revenues is a direct result of the halving event, which cut the block reward to 3.125 BTC per block. This reduction, combined with the decrease in transaction fees, has led to a critical level of revenue for older miners. The halving event is designed to control the supply of new bitcoins entering the market, but it also has a significant impact on the profitability of mining operations. Older miners, who may have invested in equipment that is no longer competitive, are now facing the prospect of shutting down their operations or upgrading to more efficient technology.

The slide in fee income post-halving is a result of the overall decrease in transaction volume and the increasing use of layer-2 solutions, which reduce the need for on-chain transactions. This has led to a decrease in the number of transactions that require fees, further reducing the revenue for miners. The situation is particularly challenging for older miners, who rely on transaction fees to supplement their block rewards. At $48.9 per PH/s/day in late April, miner revenue failed to track Bitcoin’s spot price near $95,000. This dynamic has left power-hungry mining rigs operating at a loss. Units running between 25-38 J/TH earned about $0.06 per kWh, falling short of grid costs estimated at $0.08.

Fee spikes from Ordinals and Runes activity proved temporary. Despite surging to $127 per transaction during Runes’ April 2024 launch, average fees have since collapsed below $2. The fading blockspace demand raises concerns about the sustainability of transaction-driven miner income. While 650 million users now have indirect access to Lightning Network channels, off-chain transactions have not materially boosted block rewards.

Developers are watching OP_CAT and CTV soft-fork proposals as potential catalysts. Galaxy Research expects consensus by 2025, though activation timelines remain uncertain. Stress scenarios highlight miner vulnerability. With Bitcoin priced at $96,000 and fee income at 1%, nearly 35% of the network could face negative cash flow at standard electricity rates. At $96k, Bitcoin’s price rally shaves the pain, but one in five hashes is still unprofitable if the fee share stays pinned at 1 %. The subsidy alone can’t keep mid-gen rigs humming on $0.08 power for long, highlighting just how fee-sensitive post-halving miner margins have become.

Older ASICs could pause first, driving fleet upgrades and testing Bitcoin’s decentralization. Without stronger fee markets or new demand cycles, the post-halving environment is tightening margins industry-wide. The current situation highlights the need for older miners to adapt to the changing landscape of the mining industry. This may involve upgrading to more efficient technology, diversifying their revenue streams, or even considering alternative cryptocurrencies that may offer more profitable mining opportunities. The halving event and the subsequent decline in mining revenues serve as a reminder of the dynamic nature of the cryptocurrency market and the need for miners to remain agile and adaptable.