Please. Let’s stop fretting about the effect that Bitcoin’s next halving will have on the market. We’ve been here before.

Historically, the supply shock generated by the halving has marked the start of significant bull markets for bitcoin. And as we approach the fourth halving, I believe that this trend will continue, potentially taking bitcoin’s price to a new all-time high. 

But there’s a sector of the industry that is arguably the most concerned about bitcoin’s future: miners.

Bitcoin miners need the price to increase to stay in business, especially as their proceeds are about to be reduced by half. This effectively means that the cost of mining one bitcoin doubles (assuming electricity and hardware costs remain roughly the same). 

The thesis is simple. If miners’ rewards are cut in half and the price doesn’t compensate for the loss, miners won’t be profitable enough to keep their ASICs running as transaction fees cannot (yet) take up the slack. 

Considering the supply shock, moving sideways into the halving would be like the bitcoin price dropping to $15,000 today, which would put most miners out of business. 

All this comes during an already delicate situation for the many miners operating with razor-thin profit margins, even with the inexpensive electricity costs many have access to. Miners must still cover those costs whether their mining machines are running or not: Maintaining current profitability remains critical to avoid shutting down.

But does all this mean the halving will destroy bitcoin miners? Of course not. 

We are already starting to see some of these mining operations set their contingency plans in motion. Marathon Holdings, for example, has invested $179 million to set up two entirely new mining sites, which will allow them to drop production costs by 30%. Other mining companies have ramped up their hardware acquisitions to enter the halving with increased efficiency. Finally and most noticeably, bitcoin miners are liquidating their inventories, stacking up liquidity ahead of the halving to face costs and capitalize on low ASIC prices as profitability drops.

It will get worse before it gets better

There are massive expectations from the Bitcoin community and Wall Street — especially after spot bitcoin ETFs trading now — for the halving to bring bitcoin’s price to new all-time highs.

Instead, it’s more probable that we’re going to experience a lot of pain — at least in the relative short term. 

All mining stocks leading up to the halving are likely going to tank, as miners scramble to find financing to stay alive. Would you invest in a company that you knew was about to get its revenue cut in half with no plan for correction?

The first few months will be the crunch period. Miners will be forced to turn off older, less efficient hardware, tighten their belts and grit their teeth. During this time, difficulty will drop as hashrate decreases, leaving miners waiting for the profitability to increase.

However, as past halvings have shown us, price doesn’t increase until several weeks have passed. Assuming the pattern repeats itself, this won’t happen until the end of Q3, and probably only just enough to give miners some breathing room.

By the end of the year, we will likely see a holiday bull run, followed by the typical new year’s correction. The crescendo we’ve all been waiting for won’t come until the spring of 2025 and continuing through the rest of 2025.

Outrunning the Big Bad Bear

Bitcoin’s price might rise immediately. After all, that’s what everyone’s expecting. The amount of anticipation alone might be enough to become a self-fulfilling prophecy. Then again, the halving is likely already priced in — it’s the most public, predictable event in finance. Just like we didn’t have the “god candle” everyone was expecting after the bitcoin ETF approval, we won’t get it after the halving either. 

Ordinals might also help increase the price of bitcoin. Why? Greater use of the Bitcoin blockchain in general leads to greater competition for block space, which in turn means higher transaction fees in each block for miners to keep. 

Read more from our opinion section: Bitcoin ETFs are not crypto’s finish line

We are already starting to see juicy sized blocks where the fees outweigh the block reward. This was Satoshi’s plan all along, and it seems to be working, partly supported by the ingenious use case and frenzy around Ordinals.

However, this is the most likely outcome: Price lags behind a handful of weeks. In turn, this will cause the difficulty to keep dropping until the surviving miners are able to mine profitably again. This network balancing act — albeit Bitcoin’s intrinsic mechanism to maintain security and balance — is brutal, and will certainly leave a “trail of bodies” in the process of finding equilibrium.

Competition is about to get fiercer, and only the miners who best adapt to the coming changes in price, transaction fees and network difficulty will survive to reap the rewards.

All in all, the situation in the coming months resembles an old story of two men hiking in the woods, who stumbled across a mean grizzly bear about to charge. The first man quickly bent down and swapped his hiking boots for running shoes.

The second man scoffed at the first, telling him that he could never outrun the bear, to which the first man replied: “I don’t have to outrun the bear. I just have to outrun you.”

But as we approach the fourth halving, the bear is even bigger and faster. All miners will have to adapt and pick up their pace. Some will die. Some will just survive. And some will thrive. It’s the crypto version of survival of the fittest.

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: Unpacking crypto and the markets.
• Empire: Crypto news and analysis to start your day.
• Forward Guidance: The intersection of crypto, macro and policy.
• 0xResearch: Alpha directly in your inbox.
• Lightspeed: All things Solana.
• The Drop: Apps, games, memes and more.
• Supply Shock: Bitcoin, bitcoin, bitcoin.