Riot Platforms Rules Out Guarantee Bitcoin Halving Will Favor Miners

In a recent report, Riot Platforms Inc warned that the forthcoming Bitcoin halving hardly guarantees favour to the crypto miners. The Colorado-based crypto miner warned miners to consider shutting down the unprofitable machines following the reduced rewards in the late April halving.  

The Nasdaq-listed crypto miner under the ticker symbol RIOT alerted the shareholders that the forthcoming halving may fail to yield a positive outcome towards profitability. 

Halving Threatens to Erode Profitability

The experts consider halving as the reduced reward for every block completed programmatically every four years. Its occurrence helps to check inflation. 

Riot Platforms is cautioning investors against getting overhyped in the April halving that several speculators are projecting bullish Bitcoin price. 

Riot echoed the pronouncement conveyed by its 2023 annual report that though Bitcoin prices historically rally around the halving events, there exists no guarantee for favourable price change. The firm ruled that guaranteeing the increase would realize significant compensation for the reduced rewards. 

Riot acknowledged that the halving would lower the earnings from the mining operations. The firm added that the halving will have a material effect on miners’ operations and financial results. 

The miners earn block rewards when they solve the complex cryptographic puzzle, which features enormous amounts of electricity. The considerable electricity consumption is behind the heightened criticisms of blockchain’s proof-of-work (POW) mechanisms.

Halving to Increase Energy Expenses

Meanwhile, the halving event will increase electricity demand to earn the equivalent of today’s reward, fueling higher expenses. 

The provider of Bitcoin smart contract DLC.Link chief Aki Balogh warned that multiple miners could find it infeasible to run profitably at the present electricity rates. The executive adds that the halving process doubles the electricity consumed to create the exact Bitcoin amount. The creation rate will remain constant, thus halving the miners’ margin. 

The miners are concerned about the profit margins, with experts worried that the lower-level miners would struggle particularly with their inefficient machines. 

Matthew Niemerg, who co-established layer-1 blockchain-based network Aleph Zero, observed that low energy costs equipment, particularly the latest ASICs generation, will operate seamlessly. Nonetheless, the previous generations of ASICs will prove unprofitable and likely shut down for economic reasons. 

Niemerg warned that the miners should adequately prepare to shut down the unprofitable machines. The executive added that more miners pursued the mining space following the May 2020 halving, leading to increased hash rate – the metric indicating computer power mining. 

Stronghold Digital Mining chief executive Greg Beard noted that the fierce rivalry within the mining space saw the hash rate grow fivefold since May 2020. 

Beard indicated that while the community exhibited excitement about the forthcoming halving, he considered that miners were concerned about quartering the mining economics. Such arises from the awareness that mining firms added the capacity with new equipment acquisition at a rate unmatched by the Bitcoin price. 

Crypto Miners to Favor Operating Efficiency

Beard considers that mining efficiency is mandatory and a massive priority across space. He echoed Aleph Zero’s Niemerg that those operating at low-cost power are the miners favoured to survive after halving. The low energy cost will help the miners survive, particularly with the Bitcoin price rallying. 

Riot Platforms forecasts that the global hash rate for Bitcoin mining will increase despite the experts indicating that the least efficient miners will shut down their operations. 

Riot indicated that the surging demand for Bitcoin will exist after the halving as the miners are drawn to satisfy the spike in units needed. New and present mining firms would likely deploy additional hash rates, thus increasing the computing power of mining Bitcoins. 

The publication illustrates that the mining firm’s share of the entire network hash rate will decline, thus increasing the chances of reaping Bitcoin rewards. 

The Riot Platforms report indicated that miners would likely prioritize efficient options. The mining industry would see an accelerated shift to renewable energy to minimize energy costs. Also, they would favour innovative manufacturers delivering low-cost mining equipment. 

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