Will the majority of miners quit mining next year if the price of bitcoin remains as it is today? Can it harm the network?

Question

Below are some parameters that apply to the Bitcoin network today

• Current price for producing one Bitcoin block is around ~$150,000.

• Current price for one Bitcoin is ~$45,000.

• Current reward for producing one Bitcoin block is 6.25 BTC.

It follows from the above that at this moment miners earn per block ($45,000 * 6.25) - $150,000 ~= $280,000 - $150,000 ~= $130,000

Therefore, it is profitable for them.

However, in April 2024 the reward per block will reduce to 3.125 BTC per block as a result of the 210,000 block halving.

If the price per bitcoin remains the same (and price per production of blocks), the calculation is as follows: ($45,000 * 3.125) - $150,000 ~= $140,000 - $150,000 ~= -$10,000

As you can see, the miners will be losing money. Even if the price per bitcoin increases a little, the profit is still too small for big players.

Would this situation lead to most of the big miners leaving the network? Maybe then the difficulty would be reduced, which would make it possible for smaller miners to come back again, for whom the profit of a few thousand dollars would be significant.

Can the previously described situation and the exit of big players harm the security of the network?

I don't expect anyone here to give me an accurate, concrete answer, because we can't know that, we can't predict the future. However, there are people here who have been in the bitcoin world for a long time and follow the developments, I am interested in what they think, what they expect. I assume that during the development of the network, such situations are also considered and how to overcome them.

Answer 1

An important point is that costs are not constant.

If miners leave the network as a result of block-reward halving, the network difficulty will automatically reduce and therefore mining costs will thereby reduce. This continues until some equilibrium is reached between cost of mining and numbers of miners (or, more accurately, their total employed hash-power).

It is also true that as the numbers of miners reduces, the network security reduces. I don't think there is a specific critical threshold, at least, not a known one.

In times when network difficulty reduction lags network hash-power reduction, transaction confirmation times will increase and people will inevitably make higher bids for space in the next block (i.e. transaction fees rise). This also encourages miners.