Will future halvings truly lead to government takeover of Bitcoin mining?

The next Bitcoin halving is set to take place on April 11, 2028.

Block subsidy (rewards) will halve to 1.5625 BTC, which is worth approximately $180,665 today.

This may seem like a lot of money especially since people generally fixate on just energy costs when evaluating the cost of mining Bitcoin and that roughly rounds up to value between $10k - $11k.

But this figure exempts start ups, maintenance and tax costs.

Over the years, Bitcoin mining profitability margin has been on the decline.

An earlier report in April highlights that Bitcoin mining costs grew to $137,018 per Bitcoin.

In addition to this, personalities like Sam Tabar, CEO Bit Digital, considers Bitcoin mining a doomed business.

Bit Digital CEO Sam Tabar says the commercial Bitcoin mining industry is “doomed” — even though Bitcoin mining itself will live on.

The “Bitcoin mining industry is going to be dead in two years” he tells Magazine, explaining the economics of profit and loss will no longer stack up from a business perspective.

There’s no way the mining industry can survive another halving and then, at the same time, the sovereigns get into, start participating in Bitcoin mining.” – Cointelegraph Magazine

The most interesting part of this report is this:

Bit Digital started life as a peer-to-peer car rental service in China in 2015, but pivoted to Bitcoin mining after a 2018 clampdown on P2P lending in China. In June, it announced it would completely wind down its Bitcoin mining infrastructure across the US, Canada and Iceland and redirect the funds toward its Ethereum treasury strategy.

From Bitcoin mining to investing in Ethereum.

Sam Tabar expects the governments to eventually take over Bitcoin as profitability gets thrown out the window in future halvings.

His argument is that the government basically has access to free power.

It is an interesting conclusion but I wouldn't personally say that any government has anything because all governments are funded by the people, so when it's tagged as “free,” it just means someone else is paying for it and might not actually profit from it.

That said, I've personally discussed the unprofitability of Bitcoin mining in the coming years but my focus has always been on the corporate scoop up of Bitcoin's supply.

As far as I'm concerned, Bitcoin mining has a chance to remain profitable if transactions remain on the L1, but recent TradFi interest threatens this.

But to answer the question: yes, there's a high chance the government takes over Bitcoin mining but it will likely be in the form of handouts to a few mining companies to keep operations alive.

Unless Bitcoin’s price grows to $1 million by 2028 and on-chain transactions grow, the business of Bitcoin mining will become unprofitable.

Bitcoin maxis may try to argue against this, but it doesn't take a genius to do the easy math as see that Bitcoin’s security budget is growing so large and block subsidies halving could send many mining companies packing.

Posted Using INLEO