Why only 2 crypto miners survive half of Bitcoin

As the Bitcoin network gears up for its fourth halving, expected around April 2024, the crypto mining sector is facing a seismic shift that could lead to massive consolidation.

Analysts say that two mining companies, Marathon Digital Holdings ( MARA ) and Iris Energy ( IREN ), may survive the challenges of the Bitcoin halving.

Bitcoin mining companies struggle with operating costs

With the Bitcoin protocol to be half a liar, it will reduce the block reward from 6.25 to 3.125 BTC. Historically, this event has started Bitcoin bull rallies.

BeinCrypto's global head of news, Ali Martinez, said that following the halves of 2012, 2016, and 2020, the price of BTC increased by 11,000%, 2,850%, and 700%, respectively. After all, the last two bull markets since the drawdown were similar in length, lasting 518 days and 549 days each. For this reason, Martinez expects the same situation to happen this year.

“If the upcoming bull market follows historical trends, we may expect the next Bitcoin market in April or October 2025,” Martinez said.

Read more: 7 must-have cryptocurrencies for your portfolio before the next bull run

Despite the potential for a new bull market, a halving would put a huge strain on Bitcoin miners by immediately reducing their earnings by 50% unless the price of BTC increases.

SeekingAlpha examined the cost structures, operational efficiency and strategic positioning of major Bitcoin mining institutions. The company concluded that only MARA and IREN have the operational agility and strategic foresight to withstand the upcoming Bitcoin halving.

Organizations ready to tackle Bitcoin's mining challenges

MARA and IREN excel in maintaining a competitive total cost of doing business in Bitcoin mining, a critical component of their post-halving sustainability. As costs in each industry rise and fall, these two companies show exceptional adaptability and strategic growth. So, this puts potential survivors in a consolidating market.

The approaching halving marks a critical time for Bitcoin miners, highlighting the importance of operational efficiency and strategic growth. As the sector struggles for reduced rewards, the sustainability of mining operations comes into sharper focus. Interestingly, MARA and IREN have emerged as frontrunners equipped to navigate the challenges ahead.

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

The broader implications of this consolidation go beyond the mining sector, potentially affecting Bitcoin's market dynamics and decentralized nature.

“While sector consolidation may benefit some miners in the short term, it is detrimental to the entire Bitcoin ecosystem in the long term. This type of consolidation makes the protocol more centralized, making it fundamentally unsuitable for any trustless protocol,” said a SeekingAlpha analyst.

As few, if any, watchdogs emerge, the threat of centralization in the mining sector could pose challenges to Bitcoin's trustless protocol, highlighting the delicate balance between operational sustainability and decentralization.