3 months after Bitcoin’s halving, its effects continue to be felt on the mining industry. The halving of mining rewards led to a 9.74% drop in mining difficulty, forcing many BTC miners to leave the network.
Bitcoin Mining Still Feels Consequences of Halving 3 Months Later
Being limited to a supply of 21 million BTC, the Bitcoin network has a very strict issuance mechanism, reducing the mining reward by half every 4 years during the halving.
Additionally, the Bitcoin blockchain has a difficulty adjustment mechanism to maintain an average of 10 minutes per block, ensuring good propagation of blocks and transactions, as well as relatively slow emission of new BTC.
Historically, after each Bitcoin halving, when the mining reward is halved, miners are often forced to shut down some machines or even go bankrupt due to the decrease in their profitability.
🪙 Further reading – What is Bitcoin (BTC) halving and what are its effects?
The most recent halving took place on April 20, 2024. Following this event, many miners left the network, resulting in a 5% drop in difficulty just a few days later.
Bitcoin Hash Rate and Mining Difficulty Since September 2022
This night took place a new difficulty adjustment, once again seeing a 5% decrease.
In May, 2 weeks after the 4th Bitcoin halving, we had the pleasure of welcoming Guillaume Girard, research analyst at UTXO Management, to “Peer to Peer”, our live show on the X network. We explored with him the effects of the halving on the mining sector.
Guillaume shared with us details of a report published by Galaxy to which he contributed, suggesting that in the months following the halving, between 15 and 20% of Bitcoin's total hashrate could leave the network.
Mining difficulty increased from 88,100,000,000,000 to 79,500,000,000,000, a loss of 9.74% since the last halvinga result close to the estimates in the Galaxy report.
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What is the situation for Bitcoin miners today?
Beyond the halving, several other factors impact miners' revenues, such as the price of BTC itself.
Indeed, the higher the price of Bitcoin, the further it moves away from the production cost of miners, allowing them to be more profitable and generate more profitsThe recent drop in the price of Bitcoin does not help matters.
Bitcoin price against the dollar
Over the past few days, BTC price has broken several supports, dropping from $63,000 to $53,000 in 3 days, a drop of 15%.
Such a drop also impacts the income of miners. If the price remains low or continues to fall, it could further affect their revenue and lead to a larger drop in mining difficulty.
Still, some miners are doing better, like Riot Platforms, which recently announced that it increased its hashrate by 50%, becoming the 2nd largest Bitcoin mining firm with 22 EH/s, or 3.85% of the overall hashrate.
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Sources: mempool.space, TradingView
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First attracted by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for the blockchain universe. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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