S19XPs May Not be Entirely Safe Post Halving
Revisiting bitcoin miners’ breakeven hashprice
The “sell-the-news” momentum has continued over the past week. Bitcoin dropped below $40,000, experiencing a 20%+ correction after briefly hitting $49k on Jan 11 when a dozen spot bitcoin ETFs began trading.
Sadly, there’s not much good news for bitcoin’s hashprice either: it has once again declined below $80/PH/s after some very lucrative days in December.
As bitcoin’s halving is officially less than 90 days away — currently estimated to be April 22 — it’s worth revising the breakeven hashprice for various bitcoin miners, especially given the recent market pullback.
No one knows where bitcoin’s hashrate will be after halving — the same, of course, goes for bitcoin’s market price. But at least it’s expected that bitcoin’s hashprice, the dollar amount of daily revenue expected from 1 PH/s of computing power, will go down by roughly 50% immediately after halving.
That creates some interesting dynamics. Bitcoin’s hashprice is at $76/PH/s at the moment, and if it doesn’t break out in the next 90 days, it will likely drop to sub $40/PH/s right after April 22.
In that scenario, anyone operating an S19XP at an average electricity of $75/mWh (recall the 20 EH/s by Bitmain and BitFuFu) will be in a tough spot since their equipment may not have much gross margin to squeeze, let alone net profits.
So unless they have access to the latest generation of equipment with a sub-20 J/TH of efficiency or a sub-$55/mWh power rate, chances are there will be little gross profit if bitcoin’s hashprice really halves to sub-$40/PH/s.
With that said, bitcoin mining is programmed to regulate itself. If hashprice becomes too bearish, we may see less efficient operators unplug from the network. That will reduce the network hashrate and difficulty, potentially pushing hashprice up again.
But if bitcoin’s price still doesn’t break out after halving, we may experience the same painful summer as we did in 2020 with infrastructure overcapacities.
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