The Bitcoin network has completed its fourth halving, a fundamental event that recalibrates the market's supply and demand dynamics. With the block reward now reduced to 3.125 BTC, miners face immediate revenue pressure, while the market anticipates long-term price appreciation due to increased scarcity. However, in the short term, Bitcoin's price has remained in a consolidation phase, slightly down since the halving. This situation tests miner resilience and impacts short-term investors.
This analysis explores the current state of the market, mining sector challenges, and on-chain demand indicators to understand this new phase of equilibrium.
Key On-Chain and Market Shifts Post-Halving
A common market expectation is a significant Bitcoin price increase following a halving. Historical data shows substantial gains within a year of previous events. However, the immediate price impact is often muted. This time, prices have traded within a tight range, leading to a noticeable increase in the percentage of circulating supply held at a loss.
The Short-Term Holder Spent Output Profit Ratio (SOPR) has hovered very close to 1, indicating that investors who held coins for less than 155 days are, on average, selling at a break-even point or a slight loss. This suggests that short-term traders who may have bought in anticipation of the halving are not realizing profits.
Concurrently, the velocity of coins on the network—the rate at which they are being transacted—has declined significantly. This decrease in circulation speed often signals that more coins are being accumulated and held rather than actively traded.
Growth in Large Bitcoin Holdings
A deeper look into holding patterns reveals a trend toward accumulation. There has been notable growth in coins held for medium to long-term periods (1-6 months and 3-5 years). More importantly, the number of addresses or entities holding large balances is rising.
The number of addresses holding between 100 to 1,000 BTC and, more significantly, those holding 1,000 to 10,000 BTC has grown by over 1% since the beginning of the year. This growth in large-scale holders indicates that high-net-worth individuals and institutions are continuing to accumulate Bitcoin, concentrating the supply during this period of price consolidation.
The Mining Sector's Pressure Test
The halving's most direct impact is on Bitcoin miners, whose block reward revenue was instantly cut in half. The network's hash rate has already seen a drop of over 7%, suggesting that less efficient mining operations are being powered down as they become unprofitable.
The concept of a "breakeven price" or "shutdown price" is crucial here. This is the Bitcoin price at which mining a specific rig generates just enough revenue to cover its electricity costs.
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- **Low Electricity Cost Scenario ($0.07/kWh):** Approximately 31 different mining rig models remain profitable at current prices. The most efficient model, the Antminer S21 Pro, has a breakeven price around $32,200.
- **High Electricity Cost Scenario ($0.12/kWh):** Only 3 mining models remain profitable, with the most efficient requiring a Bitcoin price above $55,000 to continue operating. This highlights how critical low-cost energy is for mining survival post-halving.
Mining Revenue and the Path to Recovery
Daily mining revenue has plummeted from a pre-halving average of ~$54.76 million to approximately $26.49 million—a drop of over 51%. For miners to return to pre-halving revenue levels, one of three things must happen:
- Bitcoin Price Appreciation: If transaction fees and volume remain at current levels, the price of Bitcoin would need to rise to approximately $94,500 to compensate for the lost block rewards.
- Surge in Transaction Volume: If the Bitcoin price remains stable, the number of daily transactions would need to increase by over 200% to generate equivalent fee revenue.
- Rise in Transaction Fees: Alternatively, the average fee per transaction would need to increase by over 206% to make up the revenue shortfall.
The launch of the Runes protocol on halving day provided a glimpse of how high fee demand can benefit miners. On that single day, transaction fees skyrocketed, contributing over 75% of the total mining revenue and pushing daily earnings to over $107 million. However, this demand was transient, and fees have since returned to lower levels.
Analyzing Bitcoin's Current Demand Side
The health of the mining sector is intrinsically linked to on-chain demand, which is manifested through transaction fees and volume. The key question is whether new protocols and applications can generate sustained demand.
The initial frenzy around Runes has cooled considerably. Daily transactions related to the protocol have fallen from over 460,000 to under 80,000, and their daily fee contribution has dropped from 881 BTC to just 4 BTC. While it demonstrated potential, maintaining this level of activity is a challenge.
Beyond new token standards, Bitcoin's evolving ecosystem, including Layer 2 solutions and DeFi applications, is seen as a source of future demand. The total value locked (TVL) in Bitcoin-based applications has grown significantly this year, reaching over $1.2 billion. Projects like Lightning Network and new entrants like AINN Layer2 are gaining traction, suggesting a growing, albeit still young, ecosystem for Bitcoin beyond simple value storage.
Frequently Asked Questions
What does "Bitcoin halving" mean?
A Bitcoin halving is a pre-programmed event that occurs every 210,000 blocks (approximately every four years). It cuts the reward miners receive for validating new blocks in half. This controls the issuance of new coins, making Bitcoin a disinflationary asset.
Why does the halving put pressure on miners?
Miners' revenue from block rewards is instantly reduced by 50%. If the Bitcoin price and transaction fees do not increase sufficiently to compensate, their profit margins are squeezed, forcing less efficient operations to shut down.
What is a mining "breakeven price"?
It's the price of Bitcoin at which the revenue from mining a block equals the cost of the electricity required to run the mining hardware. If the price falls below this level, mining becomes unprofitable.
What does the growth in large Bitcoin holders signify?
An increase in addresses holding large amounts of BTC can indicate accumulation by long-term investors (often called "holders" or "whales"). This is generally viewed as a sign of confidence in the asset's long-term value and reduces the available supply for sale.
Can transaction fees completely replace block rewards for miners?
While fees can provide significant revenue, as seen on the day of the Runes launch, it is unlikely they will consistently fully replace block rewards in the short term. The security of the Bitcoin network relies on adequate miner compensation, which is designed to come from a mix of block rewards and fees.
What is the long-term outlook for Bitcoin after the halving?
Historically, halvings have been followed by prolonged bull markets, though with significant volatility. The reduced issuance rate introduces increased scarcity, which, combined with steady or growing demand, has historically created upward price pressure over a multi-year周期.