With the third halving day approaching in some two months from now, there is another darker side of that event. A darker side that my affect miners, traders, enthusiasts, pretty much everyone.

Is halving a good thing?

Theoretically, it should be. It offers stability to the overall amount offered for trading, and therefore it drives price up. Theoretically, this happened the two other times the event took place. But it wasn't the same both times. The first one, BTC price was nearly 10X higher within the next 6 months, while for the second one, the price climbed only 10% or so. And again, nothing should be taken for granted - especially when futures traders can make profit without ever buying a single satoshi. No one can really say that decreased supply from miners would be enough to drive BTC price up.

At current BTC exchange rate, miners - most of them located in China - are barely profitable, since electricity cost eats up most of their revenues. MarketWatch had published a chart back in 2018 showing electricity cost per BTC produced:

Even at those rates, the cost to produce a single BTC would be somewhere around $6,300 - just for electricity consumed. $3,600 for the few that are located in Ukraine.

Even if you could suppose that miners would replace their mining equipment with new machines to save some energy (say 20%), this would barely cover their electricity cost. The numbers simply don't add up (unless they decide to relocate to Venezuela - good luck with that).

Electricity is not the only cost

When halving rules were drafted, the Bitcoin Organisation had single miners in mind: miners who owned a single machine, and with (relatively) equal opportunities to mine a block. But that was some 12 years ago. Today, we have whales that control the vast majority of mining machines. With more machines, they stand better chances on mining a block, compared to smaller shops. And with larger numbers, they stand better chances on borrowing money under favourable terms, to purchase new power efficient equipment.

Chances are smaller shops to go out of business, leaving whales to monopolise the market. This won't necessarily drive BTC market price up, since this price is dependent on supply and demand. But it will definitely drive transaction prices up. Transaction fees have already climbed close to 5% of the block reward, from just 1-2% three months earlier. Why this happens? Because on transaction fees, it's the miners setting the rates, not the market. With smaller players out of the game, it will be easier for the whales to take transaction rates higher, at 10 or even 20% of the block reward (in December 2017 the rate went up to 30%).

BTC was created to minimise bank fees. Halving though may drive things to the opposite direction.