On May 12, 2020, as bitcoin produced its 630,000th block and triggered the 3rd-ever halving event, BTC hashrate also surged tenably with the event. The event was highlighted by mild volatility. In the last 3 hours before the event, the price of bitcoin swung 5% to 7% in each direction.
Even as the buzz about the halving dominates Twitter, miners are facing pressure from the event, as it will affect revenues for mining companies a great deal. Indeed, we had predicted that weaker miners on the BTC network would be forced to close shop following the halving event.
Even so, On-chain data showed that the BTC hashrate didn’t drop, but managed to hit an impressive high of 126 exahashes per second (EH/s) on the halving day.
The rising trend in days leading up to the halving day may be attributed to miners scrambling to make the most of 12.5 BTC rewards just before they were cut in half, along with the increased interest from investors in the days and weeks before the halving that led to an upsurge in transaction volumes.
More Efficient Mining Machines to Replace Older Models
BTC’s mining hash rate has been recently seeing major volatility in the months prior to the halving event as the mining sector braced itself for a major reshuffle. On May 3, the hash rate set a new all-time high of more than 142 EH/s.
According to Mark D’Aria, the CEO of Bitpro Consulting LLC, this rising hash rate may be attributed to newer, more efficient rigs that are continually being plugged into the network as miners struggle to remain profitable.
The next generation of ASICs, capable of producing 100–120 terahashes per second, have already been unveiled by mining hardware giants like MicroBT and Bitmain. These include the AntMiner S17, S19 and S19 Pro models, and the MicroBT WhatsMiner M30S — both hyped to be the most profitable miners on the market.
As more of these newer model mining machines are introduced to the network post-halving, the BTC hashrate is expected to stabilize, as miners look for innovative ways to remain profitable after the just concluded rewards reduction.
BTC Hashrate Dictates Survival for Older Rigs
According to Alejandro De La Torre, VP at mining pool Poolin, miners who make up 15% to 30% of the entire BTC network hashrate are already in the process of shutting down as profit margins come under pressure.
Twitter user Omkar Godbole echoed these sentiments, arguing that older machines are now being faced out. He tweeted:
“S9s miners have already lived longer-than-expected. BTC price will have to double for these machines to become viable again.”
Bitcoin researcher Larry Cermak presented this chart below, which indicates a horrific miners’ capitulation if current BTC prices hold. The data shows that miners will earn $8.7 million today vs. $16.1 just before the halving.
Those companies operating inefficient mining rigs that incur higher electricity costs will be most affected, and possibly pushed out of the network.
However, the BTC network is unlikely to suffer the brunt of losing these “old generation” miners as increasingly efficient miners take up their place now and in the coming weeks.