As a researcher with experience in the Bitcoin mining industry, I believe that the recent decline in Bitcoin hash rate is a temporary setback caused by miners turning off unprofitable rigs after the fourth Bitcoin halving. The drop to an over two-month low of 575 EH/s on May 10 was expected, as reported by CoinShares in late April.
The Bitcoin network’s mining hash rate has dropped due to mining companies powering down less profitable mining equipment following the latest Bitcoin halving event.
The Bitcoin network’s computing power dipped to a low of 575 quintillion hashes per second (EH/s) on May 10, as indicated by blockchain.com data, before bouncing back slightly to its present level of 586 EH/s.
The hash rate drop can be attributed to the fact that “miners are beginning to turn off unprofitable rigs,” according to a May 13 X post by James Butterfill, the head of research at CoinShares.
As a crypto investor, I closely follow reports from industry experts to gain insights into market trends. In early April, CoinShares released a report predicting a temporary drop in cryptocurrency prices. The reason? The hash rate, which measures the computing power securing the blockchain, is expected to surge significantly over the next year. This increase in mining power could lead to more competition among miners and potentially lower profits for those currently in the market, causing a price correction. However, I remain optimistic about the long-term potential of cryptocurrencies and view this temporary setback as an opportunity to invest at potentially lower prices.
“Our model forecasts the hash rate rising to 700 exahash by 2025, although after the halving, it could fall by up to 10% as miners turn off unprofitable ASICs.”
According to the report, the short-term decrease can be explained by the heightened expenses of Bitcoin (BTC) mining as a result of the halving and escalating electricity costs.
“Key mitigation strategies include optimizing energy costs, increasing mining efficiency, and securing favorable hardware procurement terms.”
Infrastructure and energy costs remain key for BTC mining profitability
As a researcher studying the impact of Bitcoin’s halving events on the mining industry, I’ve come across Nazar Khan’s perspective as the co-founder and COO of TeraWulf. According to him, smaller mining operations relying on less energy-efficient equipment may face challenges following the 2024 Bitcoin halving. In an interview with CryptoMoon, he shared this insight.
“If you are a firm that just owns a bunch of machines and you are not profitable, you will be challenged. If you are a company that owns quality infrastructure that can deliver low-cost power, that’s a real asset and if anything the underlying value of that asset [BTC] has increased…”
According to Companiesmarketcap, TeraWulf ranks as the eight largest Bitcoin mining company globally with a value exceeding $670 million. Despite the recent reduction in block rewards through Bitcoin’s halving event, the company intends to broaden its mining operations this year.
Mining operations’ profitability hinges significantly on the electricity cost borne by the companies. Based on data from Hashrate Index’s May 2 post, the older ASIC models, such as S19 XP and M50S++, run at a loss when the electricity price exceeds $0.09 per kilowatt-hour (kWh).
“S19 XP & M50S++ will operate at a loss if the hash cost rises >$0.09/kWh. >$0.08/kWh k Pros & M50S+ will be unprofitable. And at $0.06-$0.07/kWh the S19j Pro+, j Pros, and M30S++ will struggle.”
Read More
- SQR PREDICTION. SQR cryptocurrency
- DOGS PREDICTION. DOGS cryptocurrency
- KNINE PREDICTION. KNINE cryptocurrency
- TON PREDICTION. TON cryptocurrency
- EVA PREDICTION. EVA cryptocurrency
- HI PREDICTION. HI cryptocurrency
- METIS PREDICTION. METIS cryptocurrency
- UXLINK PREDICTION. UXLINK cryptocurrency
- LDO PREDICTION. LDO cryptocurrency
- STG PREDICTION. STG cryptocurrency
2024-05-14 13:00