Bitcoin Hash Rate Declines Post-Halving as Miners Shut Off Inefficient ASICs

Bitcoin’s hash rate has recently seen a decline, dropping to a two-month low of 575 exahash per second (EH/s) as of May 10, 2024, following the network’s fourth halving event. This dip reflects the reduced profitability of older, less efficient mining rigs, which are being turned off by mining firms to mitigate losses, according to Cointelegraph.

The recent halving, which typically cuts the block reward by half, has exacerbated the cost pressures on miners, particularly those using outdated hardware. As noted by Nazar Khan, COO of TeraWulf, this shift primarily affects smaller operations with higher energy costs, rather than larger firms with more efficient infrastructures. TeraWulf itself is planning to expand despite the halving, highlighting the diverse strategies within the industry.

James Butterfill, head of research at CoinShares, also commented on the situation, noting that a temporary drop in hash rate was anticipated. CoinShares’ report from April 19 predicts a potential 10% fall in hash rate due to the halving but expects it to rise to 700 EH/s by 2025 as miners adjust operations and upgrade equipment.

The profitability of various ASIC models, such as the S19 XP and M50S++, is now under threat, with operations becoming unprofitable at electricity costs above $0.09 per kilowatt-hour. This scenario stresses the importance of energy efficiency and cost management in maintaining competitive mining operations post-halving.

As the industry navigates these changes, strategies like optimizing energy costs, enhancing mining efficiency, and securing favorable hardware procurement terms are crucial for sustaining profitability. This transition period will likely see a further shakeout of less competitive miners, consolidating operations to those who can achieve efficiency at scale.