Bitcoin mining has one profitable venture for any capable entity for a long time. That’s especially because mining is the most primal means of acquiring Bitcoin. As such, and looking at the crypto’s price dynamics since it hit the market a decade ago, it’s pretty safe to assume that anyone who mined their stash early enough and kept it over the years has benefitted greatly by now.
For instance, in early 2010, Bitcoin was worth a measly $0.008 per coin. Today, the top crypto price is hovering above $10,000 on the market, not to mention that it once reached about $20,000 in late 2017.
In that sense, there are 3 major factors that will drive up the crypto’s price especially after the network halving expected in May. This is according to a report released by Trade Block.
Increased Hash Rate Means More Cost
As the Bitcoin network mints more BTC and the network activity increases, miners have supplied more computing power to facilitate the operations. This computing power is the hash rate. However, an increase in the hash rate, and the mining difficulty, leads to a corresponding increase in the resources needed, mainly power and other mining utilities.
That said, it’s only logical that the crypto’s price should increase in order to cushion the miners from the increasing costs of operation. To put that into better perspective, it’s worth noting that just recently, there were reports of some miners ceasing their mining operations for fear of running into losses when the BTC price was down.
Bitcoin is just around 100 days from the 3rd network reward halving that’s expected to downsize the Bitcoins released per block from 12.5 BTC to 6.25 BTC. This means that miners will get fewer Bitcoins.
To keep their venture profitable, the crypto needs to increase in value such that the fewer coins released cover for the reduction. According to Trade Block, Bitcoin’s price should increase to between $12.5k to $15k for this to happen.
Besides the increasing hash rate and the issue of halving, Bitcoin miners have to work out their math to derive a viable price or a break-even point at which they start making a viable profit.
Currently, the break-even price is around $6,850. After the halving, this price will need to increase to maintain the total profit earned from each mined block. Basically, Trade Block estimates the price increase to be no lesser than 50% relative to the current price.