The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now<\/a>.<\/em><\/strong><\/p>\n <\/a><\/p>\n Bitcoin miners have not been operating under normal circumstances for the past several months. Bitcoin\u2019s blockchain<\/a> has seen a particularly intense degree of demand<\/a> over the past several months, and it looks like BRC-20s, and to a lesser extent, image inscriptions, all made possible by the Ordinals protocol, bear a great deal of responsibility. Essentially, this protocol enables users to inscribe unique data on the most minute denominations of bitcoin, allowing them to create new \u201ctokens\u201d directly on Bitcoin\u2019s blockchain. This means that quantities of bitcoin worth pennies in terms of their fiat value may nevertheless be bought and sold multiple times, with every one of these transactions needing to be processed through the same blockchain, not to mention the high demand seen while initially minting.<\/p>\n This is where the Bitcoin miners come in. The energy-utilizing computations undertaken by specialized mining hardware are not only meant to generate new bitcoin, but they also can be used to verify the blockchain\u2019s transactions and keep the digital economy flowing smoothly. With network usage about as high as it\u2019s ever been, miners have more than enough opportunities to earn revenue just by processing these transactions, and the actual production of newly-issued Bitcoin can take something of a backseat. As of February 2024, these conditions have created a situation<\/a> where mining difficulty is higher than ever before in Bitcoin\u2019s history, yet the industry is raking in large profits. However, one of the most reliable patterns in the Bitcoin market has been the sheer chaos that sees fees spike and then plummet. So, what will happen to miners after these conditions change?<\/p>\n It\u2019s this ecosystem that became quite disturbed on January 31 when federal regulators declared a new mandate<\/a>: the EIA, a subsidiary of the US Department of Energy (DOE), was going to begin a survey of electricity use from all miners operating in the United States. Identified miners will be required to share data on their energy usage and other statistics, and EIA administrator Joe DeCarolis claimed that this study will \u201cspecifically focus on how the energy demand for cryptocurrency mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet cryptocurrency mining demand.\u201d These goals seem straightforward enough at first glance, but several factors have given Bitcoiners pause. For one thing, Forbes<\/em> claimed<\/a> that this directive came from the White House, which referred to this action as an \u201cemergency collection of data request.\u201d This survey is explicitly created with the goal of examining the potential for \u201cpublic harm\u201d from the mining industry, and even included an aside that this \u201cemergency\u201d collection might lead to a more routine collection expected from every miner in the near future. <\/p>\n Obviously, language like this has left many in the community extremely uneasy, and several leading miners have already made statements condemning<\/a> the initiative. The tone coming from regulators seems to be of an overwhelming narrative that these businesses are a potential threat, whether by increasing carbon emissions, taxing electrical infrastructure, or being a public nuisance. Some of the most egregious claims are easily debunked<\/a>, but it doesn\u2019t change the reality that a few hostile government actions could greatly upset this ecosystem. Furthermore, the world of mining already has a major upset on the horizon, in the form of the impending Bitcoin halving. This regular protocol baked into Bitcoin\u2019s blockchain is set to automatically cut mining rewards in half sometime in April, at block 840,000, and already some pessimists are claiming<\/a> that this upset will be enough to put nearly the entire industry out of business. What are the actual worst case scenarios here? What are the most likely ones?<\/p>\n First, it\u2019s important to examine some of the factors inherent to Bitcoin that are likely to impact miners, regardless of government pressure. The miners are in a bizarre market situation because transaction fees can generate revenue on the same level as actual mining, but the situation may be stabilizing. New data shows that Ordinals sales plummeted<\/a> by 61% in January 2024, showing that their impact on blockspace demand is likely to diminish. So, if certain miners are depending on these tokens to maintain profits, that revenue stream is not looking particularly dependable. However, even though network usage from these microtransactions is likely to plummet, regular transactions are actually looking great<\/a>. The trading volume of bitcoin is higher than it has been since late 2022, and it shows no signs of stopping. Surely, then, there will be plenty of demand for the minting of new bitcoin.<\/p>\n