It’s not a secret that once every four years a software update named “halving” occurs into the BTC crypto world attacking the revenues of companies who are responsible for this digital currency’s smooth working. The next one is scheduled at the end of April 2024 and miners are getting ready to face the hard challenge that comes with that – losses in block rewards during mining. Historically speaking this one will be the biggest one yet, and major shareholders are coming up with strategies to cope with this outcome and potentially soften the blow on their portfolios.
Capitalizing on Bitcoin’s Soaring Value
Most holders take a more traditional approach which is the accumulation of Bitcoin from their rewards, followed by a massive liquidation just before the halving event, in order to save some money for operational costs. However, this method might not be useful this time, because of the recent increase of the value of BTC. If playing smart, miners are set to benefit from potential hikes increase post-halving, with fewer Bitcoins sold off pre-halving, setting control over their revenue losses.
A perfect example of this strategy takes place in December 2021 when the price of Bitcoin suddenly increased from around $9,500 during the halving to a record high price of approximately $69,000. This increase highlights the possibility of gaining much higher returns if miners hold onto their rewards and sell them during the next peak price timings. Other factors also played a role in this huge increase like the COVID-19 pandemic and more miners coming from China.
Spot Bitcoin ETFs Driving Demand
Another important update is the rise of spot bitcoin exchange-traded funds (ETFs), that serve as the key player in the demand for Bitcoins. Ever since they have been introduced to the crypto market, these ETFs have accumulated a significant amount of Bitcoins, making the supply of Bitcoins shorter and potentially bolstering prices.
Exploring Alternative Revenue Streams
In every book exploring the basics of economy it is stated that the best way to protect your assets is by diversifying your revenue and it is clear that forward thinking miners do follow that rule. While anticipating reduced block rewards, their revenue streams are coming from various sources in order to sustain profitability.
Companies like Marathon Digital Holdings are pioneering innovative approaches to offset rising operational costs. Their CEO has announced that it is essential to maintain the mining operations despite escalating expenses. To achieve this, the company is investing in energy-efficient machinery and exploring “energy harvesting” initiatives. This involves harnessing stranded methane gas or biomass to generate electricity for mining operations, with surplus energy and by-products sold to industrial consumers. Thiel envisions driving mining costs to zero by the next halving in 2028, positioning mining as a means to an end rather than an end in itself.
Adapting to Blockchain Innovations
Another way of protecting from the losses by halving is by accepting blockchain innovations such as Bitcoin ordinals and Layer 2 networks. These boosters hold the promise to strengthen miner revenue by increased transaction fees. Bitcoin ordinals, akin to non-fungible tokens (NFTs), store unique digital assets directly on the Bitcoin blockchain. This innovation could lead to higher transaction fees, offering miners an additional revenue stream.
The main goal of Layer 2 networks is to speed up the processes by making faster and cost effective transactions, while maintaining security such as transactions. Layer 2 solutions are applicable in every area in the crypto universe. What are the benefits of Layer 2 networks?
- Safety: One reason BTC holders benefit from Layer 2 networks is for entertainment purposes and we take online gaming as an example. For instance, playing in the best crypto slots sites has never been safer and smoother thanks to Layer 2 networks. Players can easily boost revenues for anyone professionally involved in these transactions and feel certain that their funds are secured.
- Enhanced Scalability: Layer 2 solutions significantly increase the number of transactions a network can handle at any given time. This means that more users can interact with the blockchain simultaneously without congesting the network.
- Improved User Experience: With faster transaction times and lower costs, users enjoy a more seamless experience. This is particularly beneficial for applications requiring quick and frequent transactions, such as microtransactions in gaming or real-time betting platforms.
- Interoperability: Some Layer 2 solutions offer interoperability features, allowing for the exchange of assets across different blockchains. This can broaden the market for users and developers, creating a more interconnected and versatile crypto ecosystem.
Couple Last Words
Thanks to the digital innovations occurring around us, we have more powerful weapons to fight the challenges such as halving. Even though miners do face multiple dares coming from events like this one, nothing is impossible if you are prepared with great strategy and effective digital tools. So make sure to make some planning ahead and do some research.
