Bitcoin’s Potential Network Security Crisis: Exposed Risks Under the Halving Mechanism During the Next 1–2 Halvings！

Bitcoin’s halving mechanism, occurring every four years, enforces its rigid total supply control. On one hand, it constrains Bitcoin’s inflation rate, while simultaneously creating potential security risks for the future. Based on the current block reward (excluding transaction fees), the security asset reset leverage already exceeds 200x. After the next halving, this leverage will rise to 400x.

Bitcoin urgently needs to expand transaction fees to enhance future network security.

— -

**Key Terms Clarification:**

- **Halving Mechanism**: A pre-programmed reduction of block rewards by 50% every 210,000 blocks (~4 years).

- **Security Asset Reset Leverage**: Reflects the ratio of mining costs (energy, hardware) to block rewards. Higher leverage implies greater vulnerability to security risks if rewards decline.

- **Transaction Fees**: Fees paid by users to prioritize transactions, increasingly critical as block rewards diminish post-halving.

**Bitcoin Mining Network Replacement Cost Analysis**

Based on existing data, the replacement cost of the Bitcoin mining network requires a multidimensional analysis encompassing hardware procurement, power consumption, maintenance, operations, and infrastructure. Key aspects are discussed below:

— -

### **1. Hardware Replacement Cost: Miner Scale and Unit Price**

Current Bitcoin networks are dominated by ASIC miners, with Bitmain and MicroBT holding the mainstream market (94% of public miner procurement). Key models include:

- **Bitmain Antminer S21**: 200 TH/s, energy efficiency of 17.5 J/TH, unit price ~$4,000.

- **MicroBT M60S**: 186 TH/s, energy efficiency of 18.5 J/TH, unit price ~$3,500.

- **Bitmain S19 Series**: e.g., S19j Pro (104 TH/s) and S19k Pro (120 TH/s), unit prices range from $2,000 to $3,500.

#### **Hash Rate and Miner Quantity Estimation**:

- 2024 network hash rate: **690 EH/s** (based on annual power consumption of 121.1 TWh and average energy efficiency of 20 J/TH).

- **Average Hash Rate per Miner**: Weighted by market share (S19 series 27%, M50 series 27%, S21/T21 series 25%, etc.), ~141.81 TH/s.

- **Required Miner Quantity**: 690 EH/s ÷ 141.81 TH/s ≈ **4.865 million units**.

#### **Total Hardware Cost**:

- Weighted average unit price: ~$3,176 (considering model distribution) [[8,10–16]].

- **Total Hardware Cost**: 4.865 million units × $3,176 ≈ **$15.45 billion**.

— -

### **2. Power and Energy Efficiency Costs**

Power consumption is a core ongoing operational cost, but replacement costs must account for initial power reserves or prepayments:

- **Power Consumption per Miner**: Mainstream models range from 2,760W (S19k Pro) to 3,610W (T21).

- **Annual Network Power Consumption**: 121.1 TWh in 2024, corresponding to ~$0.61 billion in electricity costs (at $0.05/kWh).

- **Energy Efficiency Trends**: New-generation miners achieve <20 J/TH (e.g., S21 at 17.5 J/TH), reducing per-TH power costs.

— -

### **3. Infrastructure and Maintenance Costs**

Mining facility construction includes fixed investments in sites, cooling, and maintenance:

1. **Site and Power Infrastructure**: Annual cost for a 20,000 kW facility is ~¥77.5 million (China) or ¥83.78 million (US), with power costs exceeding 80%.

2. **Cooling Systems**: Heat dissipation accounts for 10–15% of operational expenses; high-power models require additional liquid cooling investments.

3. **Maintenance and Labor**: Includes repairs, software updates, and technician salaries, costing ~thousands of USD per facility annually.

Infrastructure costs are estimated at 15–20% of hardware expenses, i.e., **$2.32–3.09 billion**.

— -

### **4. Impact of Market Concentration on Costs**

- **Miner Supply Monopoly**: Bitmain and MicroBT control 94% of the new miner market, potentially inflating hardware prices.

- **Mining Pool Centralization**: Top 10 pools control 80% of network hash rate, which may lower unit costs through bulk purchases but increases supply chain risks.

— -

### **5. Total Replacement Cost Estimate**

| **Item** | **Cost Estimate (billion USD)** |

| — — — — — — — — — — — — — | — — — — — — — — — — — — — — — — — |

| Hardware Purchase | 15.45 |

| Infrastructure | 2.43 |

| **Total** | **17.88** |

*Note: Excludes ongoing power expenses and potential policy risk premiums.*

— -

### **6. Risks and Variables**

1. **Technological Iteration**: ASIC miner upgrade cycles (~2–3 years) may rapidly depreciate existing hardware.

2. **Power Price Volatility**: If electricity rises to $0.07/kWh, annual costs could increase to $8.5billion.

3. **Policy Risks**: Mining restrictions in certain regions may raise relocation costs.

— -

### **Conclusion**

The replacement cost of the Bitcoin mining network is estimated at **$17.88 billion**, primarily driven by current mainstream hardware and infrastructure investments. This cost is highly sensitive to hardware upgrades, energy prices, and policy shifts, requiring miners to continuously optimize efficiency and supply chains to maintain profitability.

— -