The impact and after effects of the Bitcoin mining reward halving last week are starting to play out and stabilize somewhat. The reward halving was intended to decrease the supply of new coins coming into circulation, but the direct effect is that moner profitability was sliced in half. This has a major impact on miners and how they operate, but things are starting to right themselves.
When the halving took place, as expected, there was a drop off in miner activity and the Bitcoin hashrate fell — however, it did not fall as low as it did after the mid-March price collapse that also impacted mining profitability.
Additionally, there has not been too much panic at this miner activity drop as many suspected the weaker miners would have fallen out in March, and because Bitcoin;s mining system is designed to take into consideration fluctuating hashrates.
There has recently been a six percent difficulty adjustment on the Bitcoin blockchain in order to account for the fall in hashrate, and this makes mining that much more profitable. This has already helped welcome back some popular mining rigs that are a little more obsolete nowadays.
S9s come back to Bitcoin
S9 mining machines have been one of the most popular rigs around for some time, however, their position as one of the more powerful machines has come and gone as there are newer, more efficient machines around.
That said, they are still prevalent, but more prone to lower profits, thus with the six percent difficulty adjustment, so these rigs are returning to action. Following the halving, the S9 only accounted for 18% of the network hashrate. Yet, this week saw a surge in S9 miners, with the devices now accounting for 32% of Bitcoin’s total hashpower.
One of the reasons that the difficulty is at a high point, and could do with coming down a bit after the halving, is the rush to mine the chain before the halving comes into effect.
“We believe that, as the halving drew closer, miners in China did a sprint run of mining, even with older generation machines, to make most of the last days of the higher block rewards,” said Kevin Zhang, director of blockchain strategies at Greenidge Generation.
Alejandro De La Torre, vice president of the mining pool PoolIn, agreed that miners were switching on to mine as much as possible before the halving.
“That’s why we saw those sky-high hash rate figures,” he said. But as the halving kicked in midway, he said, miners that were marginally profitable had to switch off.