Fidelity: Bitcoin security held up after April halving

Fidelity Digital Assets released a research report that finds Bitcoin’s security has held up following the April 20, 2024 halving. The firm’s analysis attributes the resilience to higher bitcoin prices and greater transaction fee income that have offset the lower block subsidy.

The halving reduced the block subsidy from 6.25 BTC to 3.125 BTC. The report, authored by research analyst Daniel Gray, shows average daily miner revenue rose from roughly $26,300 during Bitcoin’s first halving cycle to more than $40.2 million today.

Fidelity’s report describes a mix of incentives that can support miners: transaction fees, market-driven rewards and other economic pressures that increase the cost of mounting an attack on the network.

“Despite declining issuance, miner incentives — and by extension, network security — historically strengthened alongside Bitcoin’s price,” Daniel Gray wrote in the report.

The report notes Bitcoin’s fixed supply schedule will steadily reduce new issuance until block subsidies disappear. It does not assert that fees will inevitably replace subsidies; rather, it limits its findings to observed revenue and price trends across past halving cycles.

At the same time, publicly traded miners face near-term financial pressure from smaller subsidies, higher operating costs and greater competition. Several mining firms are investing in artificial intelligence and high-performance computing to use existing power and data-center assets for new revenue.

Fidelity’s report cites an industry estimate that publicly traded miners could require as much as $50 billion in additional capital to convert operations to AI-ready infrastructure. A consulting firm noted that AI and HPC facilities demand higher standards for uptime, cooling, electrical redundancy, networking and customer support than many current Bitcoin mining sites.

The report presents historical revenue and price data that, in Fidelity’s view, show miner incentives have not weakened in past halving cycles when fee income and market prices are included. It also documents the financial and operational challenges that are driving some miners to diversify into compute-intensive services.