Major Signal from Chinese Bitcoin Mogul! Bitcoin Miners' Revenue Plummets by 46%, "Shenyu" Mao Shixing: Some Miners May Be Forced to Shut Down

With the frenzy over Bitcoin inscriptions and Runes fading, the fourth Bitcoin block reward halving took place, causing miners' revenue to plummet by 46% in May compared to the previous month, dropping to $963 million. Mao Shixing, one of China's earliest Bitcoin pioneers and the founder of the world's largest Bitcoin mining pool F2Pool, warned that some miners might be forced to shut down.

The fourth Bitcoin halving was completed on April 20th at 8:09 AM Beijing time, when the block height reached 840,000. At the same time, the much-anticipated non-fungible token protocol Runes was launched, triggering a market frenzy as users rushed to mint Rune tokens, significantly increasing Bitcoin transaction fees.

The market focused on the on-chain activity on April 20th, with transaction fees peaking at 1257.71 BTC, accounting for over 75% of the miners' revenue that day.

However, the market enthusiasm for Bitcoin inscriptions and Runes has since waned, putting miners in a difficult position.

Mao Shixing explained that the Bitcoin halving primarily impacts the supply side but affects various market participants to some extent.

He pointed out that the halving event has led to a substantial reduction in miners' revenue, particularly affecting those using older mining rigs like the S19 Pro and M21. Because the marginal returns of these older machines are insufficient to cover costs, many miners are forced to shut down operations or relocate to regions with lower electricity costs. The halving also prompts miners to accelerate the upgrade of their mining rigs to improve efficiency and reduce costs.

Additionally, the entry of large listed mining companies and traditional financial capital has limited the overall reduction in network hash rate. Large miners have stronger risk resistance and capital strength, enabling them to maintain stable operations and even expand their market share amid market fluctuations.

The impact of the halving is not limited to the supply side. Mao Shixing also mentioned that although Bitcoin itself does not require staking, both holders and miners wish to earn yields through staking. Therefore, miners and Bitcoin holders hope for more staking and restaking protocols to emerge. The future growth or decline of transaction fees will also affect the development of the Bitcoin network and its ecosystem.

Bitcoin miners' revenue mainly comes from two sources: block rewards and transaction fees. While block rewards (newly generated Bitcoins) are fixed, transaction fees vary based on network transaction volume and congestion.

Thus, when transaction volumes surge and the network is congested, transaction fees rise accordingly, increasing miners' total revenue.

Despite high fees raising transaction costs and reducing the number of active addresses on the Bitcoin network to a three-year low, the transaction fees boosted by Runes and inscriptions helped maintain miners' income at pre-halving levels.

Recently, as the frenzy over Runes and inscriptions has subsided, Bitcoin transaction fees have returned to mid-2023 levels, significantly reducing miners' revenue. According to The Block data, due to the fourth Bitcoin block reward halving, miners' revenue in May dropped by 46% from the previous month to $963 million, though it was close to the same period last year.