The Bitcoin halving, an event that takes place once every four years, cuts the block reward paid out to miners on the network by half. While a lower amount of coins entering circulation is a welcome development for BTC holders as far as price is concerned, the same can’t be said for miners that will bear the brunt of a smaller reward in a highly capital intensive operation.

A report from CoinShares examining the impact of the halving on miners suggests that only a handful of miners will remain profitable, contingent on the price of Bitcoin remaining above the $40,000 mark.

Last year alone, the Bitcoin network recorded a 104% increase in hashrate, representing the amount of new computing power dedicated towards mining the cryptocurrency. The CoinShares report found that the average cost of production per Bitcoin for each miner post-halving would amount to $37,856.

Based on historical data around hashrate, miners appear to increase their capital expenditure in order to stay competitive in anticipation of the halving, after which they earn less immediate income. 

This so-called “Bitcoin rush” that drives up mining difficulty in the months leading up to the event pushes out miners who are unable to keep up with the higher cost of production. Analysts estimate that the post-halving hashrate could be driven up to as much as 550 exahashes per second (EH/s) by the end of 2024.

“This halving is likely to kick out those along the higher end of the cost curve, leaving those that remain who have ample liquidity with a great opportunity to acquire hardware at a discount,” noted CoinShares in its report.

Accounting for miners’ cost of electricity, number of Bitcoin produced, computing power, and operational expenditure using their cash and reserves, the CoinShares analysts believe that Riot, TeraWulf and Cleanspark are best positioned going into the halving.

“Most of the pain miners will experience likely stems from hefty SG&A expenses which will likely need to be cut to remain profitable,” they said.