Bitcoin Miners Brace for Market Turbulence as Halving Strains Network

Bitcoin miners' resilience is being tested as the network's halving takes a bite out of their bottom lines. Inefficient miners are switching off after the reward for new blocks was cut in half from 6.25 BTC to 3.125 BTC on April 19.

Bitcoin miners’ resilience is being tested as the network's halving takes a valuable bite out of their bottom lines.

After the reward for mining a new block was slashed in half from 6.25 BTC to 3.125 BTC on April 19, inefficient miners are switching off, pushing the hash price for mining to four-year lows, reaching $0.04 per terahashes per second (TH/s) per day on July 4.

Meanwhile, miners are also bracing for a 5% drop in Bitcoin’s mining difficulty – a measure of how hard it is for a miner to create a new block – which would mark the second-largest drop since the FTX collapse in 2022.

During that event, Bitcoin’s mining layer saw a 7% decline as the SBF-induced cataclysm sent shockwaves throughout the industry.

“The 6% difficulty drop is an economically rational response by global miners to the hash price we’re seeing,” Taras Kulyk, founder & CEO of SunnySide Digital, a data center provider for the Bitcoin mining industry, told The Defiant.

“This is not pain for a majority of the miners, but a reprieve from the rapid hash rate gains we’ve been seeing.”

Kulyk’s assessment was shared by Anthony Power, co-founder of Power Mining Analysis.

“The drop in both difficulty and hashpower will actually be good news for the North American Bitcoin miners who have the most efficient mining fleets and low-cost energy,” said Power, adding that “they will effectively be able to achieve higher BTC production.”

Halving puts a strain on the network

Bitcoin mining is an energy-intensive process that sees specialized computers, known as ASICs, competing to find a random number within an astronomical range of possibilities. Every ten minutes, on average, a miner finds the number and is rewarded with a block of BTC – securing the network in the process.

According to the protocol's rules, the network halves the block reward every four years or 210,000 blocks, reducing the rate at which new bitcoin is generated and limiting the supply of new BTC entering the ecosystem.

This event is typically accompanied by a large exodus of miners from the network.

Larger miners are focusing on operational efficiency gains

Kulyk’s team has observed that larger-scale digital miners have been prioritizing operational efficiency gains over the last 2 months rather than scaling up hardware purchases.

“Once the bitcoin price shows a renewed price appreciation momentum, we’ll likely see those waiting on the sidelines continue to snap up new generation hardware to continue the refresh cycle of older generation hardware,” he said.

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