The next Bitcoin halving is slated to be the next mega event in Bitcoin’s lifecycle, and many are pinning their hopes of striking it rich on the halving event causing Bitcoin to moon. However, many people don’t fully understand as to why the halving event will help propel Bitcoin upwards, and why many are predicting wild prices that are nothing but fiction.
It’s All About the Break-Even Levels
Crypto traders only control a certain aspect of Bitcoin’s price, having the power to perform short-lived pumps and dumps – the people with the real power are crypto miners. This means that to properly assess and prepare for the halving, and to more accurately predict the level Bitcoin will rise to, we need to see at what point a crypto miner breaks even and when they make a profit. Currently, the most profitable Bitcoin mining rig is the Antminer S17, roughly breaking even around the $3,600 mark. This means miners using the S17 will continue to make a profit as long as Bitcoin trades for more than $3,600. On the other end of the spectrum, we have the Antminer S9 that breaks even around $7,650.
How Does this Help Predict Prices?
As the halving takes place and the block rewards get cut in half, miners need to make twice as much money from the sale of their Bitcoin in order to remain at the same profit/break-even levels. So, if a miner running a farm of S17s, they would need the price of Bitcoin to be at least $7,200 to break-even – owing to half the number of Bitcoins being produced per block. The situation is worse for miners using S9s, as they need Bitcoin to be at least $15,300 to break-even. Now, either miners will stop selling Bitcoin and hodl it in order to push the price upwards and create their break-even price, or they will swap to more efficient mining rigs.
This isn’t an exact science, but if the miners aren’t making money, then there is no incentive to mine. Henceforth, the halving event should see Bitcoin’s price rise nicely, but not to the millions a handful of crypto “analysts” are predicting – it just doesn’t fit the tokenomics of Bitcoin.
