As we rapidly approach the next Bitcoin halving, miners are still finding that the average transaction fees don’t quite cut it in terms of bankroll. Once the Bitcoin halving takes place, miners will suddenly begin receiving half the amount of Bitcoin they usually would when they win a block.
Receiving less Bitcoin per block means less profits unless the price of Bitcoin increases. While many miners are set up so that they can still be profitable at around $2,000 per Bitcoin with the current reward, that break-even level will double once the Bitcoin they’re rewarded with is slashed in half.
Miners Feeling the Pinch
Over the past few weeks, we’ve seen the total Bitcoin network hashrate start to tail off, owing to the dips in the price of Bitcoin. As Bitcoin has increased in value, a lot of this hashrate came back to the network, helping Bitcoin drive closer to the next ATH hashrate. But, we could see this hashrate drop once more when the halving takes place next month.
If a miner is currently earning 12.5BTC per block and they break even with the sale of each Bitcoin at the price of $2,000, once that reward is cut in half they will need each Bitcoin to be worth at least $4,000 to break even. But nobody just wants to break even, everyone wants to make profit, so in order to make the same level of profit, Bitcoin needs to double in price to around €14,000 in order for miners to remain living the same lifestyle they’ve become accustomed to with the 12.5BTC block rewards.
Transaction Fees Could Replace the Missing Bitcoin
Rather than praying for the price of Bitcoin to rise, or manipulating the price by selling less Bitcoin block rewards, miners could instead rely on transaction fees from blocks to make up for the cut in profits. Unfortunately, on the Bitcoin network, transaction fees are still far too low for this to even be possible, and the block size limits how much miners can make in transaction fees per block.
Over on Bitcoin SV, the huge 2GB block size allows miners to fit in more transactions per block, therefore earning more in terms of transaction fees. If BSV miners utilized this huge block size, they would make more money from the transaction fees alone than they would the block reward. While Bitcoin realistically cannot increase block sizes to 2GB, the proof is there that this is a potential solution for miners to vote on should they feel the pinch following the halving.
As it stands, the 30 day average for transaction fees on the Bitcoin network stands at around $0.68, while the 30 day average for transactions per block stands at a 1 year low with 1,861. That means miners on the Bitcoin network are only making around $1,265 in transaction fees per block – not enough to offset the dent that the halving will put in miners P/L reports.