TL;DR

• Late last week, JP Morgan released a report about the upcoming Bitcoin halving happening in April 2024, calling it "a stress test for Bitcoin miners."

• In order for BTC miners to stay profitable, one of two things needs to happen - either, the value of each BTC needs to go up; or, the price to mine each BTC needs to go down (through cheaper sources of energy, better quality mining rigs etc.).

• The report went on to say that innovations like ​Ordinals​ inscriptions on the Bitcoin network have been generally positive for the value of BTC, but more innovations will need to come (similar to ​Vitalik's predictions​ last week).​

Full Story

Late last week, JP Morgan released a report about the upcoming Bitcoin halving happening in April 2024.

They called the BTC halving event "a stress test for Bitcoin miners."

Here's what that means and why:

Every ~4 years, the rewards for mining BTC reduce by - you guessed it - half.

Because there is a fixed supply of 21M BTC ever created, the 'Bitcoin halving cycle' has historically marked the start of a ​bull run​.

(Demand + scarcity = people valuing it more).

But, the key point in JP Morgan's report is: there are real, fixed costs when it comes to actually mining BTC.

Electricity, hardware (i.g. mining rigs), and some human labor, are all required in order for BTC miners to be successful.

So in order for BTC miners to stay profitable, one of two things needs to happen - if both can happen, even better.

Either, the value of each BTC needs to go up; or, the price to mine each BTC needs to go down (through cheaper sources of energy, better quality mining rigs etc.).

The report went on to say that innovations like ​Ordinals​ inscriptions on the Bitcoin network have been generally positive for the value of BTC, but more innovations will need to come (similar to ​Vitalik's predictions​ last week).

The BTC halving cycle is a magical thing.

Building scarcity into a currency, programatically, is something that had never been done before the invent of BTC.

(In fact, the opposite was true, which has led to inflation over the years).

Let's see how the mining companies respond to the 'stress test' early next year!