Bitcoin’s Hash Rate Soars Following Halving, Leading to Challenges for Miners
Introduction
The recent Bitcoin halving has resulted in a sharp rise in the cost of mining, causing further obstacles for an industry already grappling with declining profit margins. Additionally, the decline in Bitcoin’s price has negatively impacted mining profitability, exacerbating the challenges faced by miners.
Rise in Hash Rate
According to Julio Moreno, the Head of Research at on-chain analytics firm CryptoQuant, the hash power required to produce one Bitcoin per day has exceeded 1 exahash per second (EH/s) for the first time in history. This rise in hash rate emphasizes the increasing computational power needed to create new blocks and add them to the Bitcoin ledger.
Impact of Halving on Miners
Halvings significantly affect miners’ revenue due to the reduction in fixed block rewards. The most recent halving led to a reduction of incentives from 6.25 BTC to 3.125 BTC per block, necessitating miners to double their mining investments to break even. Glassnode data disclosed that the total number of Bitcoins produced has dropped from an average of 900 per day before the halving to just 400-500 since the event.
Mining Expenses Amplified
With the decline in Bitcoin’s price, miners face further challenges. Despite a brief bullish momentum, the king cryptocurrency’s value slipped, causing the hash price, a crucial indicator of mining profitability, to sharply fall by 72% over the week.
Hope in Transaction Fees
While block rewards are becoming an increasingly unviable source of revenue for miners, there is optimism surrounding transaction fees. The Runes protocol, for example, witnessed a significant surge in fees immediately after the halving, partially compensating for the revenue loss. In fact, around 75% of the cumulative miner earnings from halving day came from fees paid by users.
