- Bitcoin’s hash rate could decrease by 15% to 30% due to the upcoming halving event in 2024.
- Diminished rewards for miners may lead to unprofitable operations and the power-down of mining rigs.
- Miners are investing in advanced machines to optimize operational efficiency and lower energy consumption.
- Recent years have witnessed significant growth in hash rate with the commissioning of new mining machines.
Crypto-computational potency within the Bitcoin network, denoted as “hash rate,” could potentially undergo a precipitous decline of up to 30% as unremunerative miners deactivate their rigs following the imminent halving event projected for April 2024.
These revelations surfaced during an engaging and intellectually stimulating discussion held on Twitter Spaces by CoinDesk, as an integral component of Mining Week 2023.
Lucas Pipes, an astute Managing Director at the esteemed investment bank B. Riley Financial, has ventured an estimation of a 15% to 30% downturn in Bitcoin’s hash rate. Colin Harper, a luminary at Luxor Mining, heading their content division, opined that a 20% reduction is within the realm of possibility.
In a cyclic cadence, approximately every quadrennial interval, the Bitcoin blockchain doles out diminished rewards to miners for successfully mining a block, adeptly administering the supply economics of the decentralized ledger. Termed “halving,” this pivotal event shall soon diminish the reward from the current 6.25 BTC per block to a mere 3.125 BTC per block.
Correspondingly, as the rewards contract, the cost incurred to successfully mine a single block experiences a twofold escalation. Unless there are significant bullish surges in the valuation of Bitcoin, this would necessitate unprofitable miners to power down their machines, consequently constricting the overall hash rate across the network.
In pursuit of circumventing this predicament, miners have been fervently endeavoring to upgrade their mining fleets with state-of-the-art, next-generation machines that exhibit heightened operational efficiency and demand lesser energy consumption per successful block mined.
Indeed, the outlays on power typically constitute the most substantial operational expenses for miners, thus optimizing these costs assumes paramount importance to endure the upcoming halving.
Over the past year, the hashrate has witnessed a noteworthy ascent, as a plethora of new mining machines have been commissioned. Simultaneously, the efficiency of these machines has undergone an approximate twofold augmentation approximately every quinquennial period.