Why Bitcoin Miners Are Backing for Capitalization After Halving

As Bitcoin prices continue to experience high volatility after the halving, the stability of the entire crypto-mining industry may fall at a critical support level.

Currently hovering around $57,000, Bitcoin has experienced a significant decline from its March 14 all-time high of $73,750. This decline will put a lot of pressure on Bitcoin miners who are struggling with the effects of the latest stripping event, which reduced rewards from 6.25 BTC to 3.125 BTC.

Following the halving, will bitcoin miners be revealed?

Despite these challenges, CryptoQuant CEO Ki Young Ju recently stated that Bitcoin miners have failed to show signs of capitalization. Typically, capital is generated when miners, unable to cover operating costs due to a falling bitcoin price, are forced to sell their holdings, which can further depress the price.

However, Ju's analysis shows that miners are holding on to their assets and betting on a future price recovery.

“Bitcoin miners' earnings have dropped to levels seen in early 2023 following a halving. Now they have two options 1. Capitalization or 2. Waiting for BTC price increase. There are no signs of a reversal now,” said Ju.

This optimism has some analysts predicting a recovery. After past halvings, Bitcoin often experiences price volatility, historically leading to rallies due to asset scarcity. This pattern suggests that price increases may be in line with miners' decisions.

Read more: Bitcoin Half Cycles and Investment Strategies: What You Need to Know

However, Charles Edwards, founder of Capiol Investments, believes that the recent downward price action could soon spell doom for Bitcoin miners. The electricity cost to run the Bitcoin network is currently a staggering $77,400 per BTC mined. This figure represents the direct energy costs associated with mining each bitcoin.

When the price falls below the price of electricity, it only lasts for a few days every four years. According to Edwards, this situation can lead to one of three outcomes:

The price of Bitcoin can increase significantly. Approximately 15% of miners may stop working. Transaction fees can remain higher than average.

This situation reflects the poor balance between mining operating costs and market prices.

Read more: Half a story of Bitcoin: Everything you need to know

For this reason, the market's next moves are eagerly awaited, with analysts looking forward to the $57,000 level. If this support is broken, it could trigger a wave of selling from miners, which would meet the capital requirement.