The price of Bitcoin hashrate is also at the lowest it’s been in more than four years.
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, which has pushed the hash price for mining towards a four-year low, reaching $0.04 per terahashes per second (TH/s) per day on July 4.
Miners are also preparing for a 5% drop in Bitcoin’s mining difficulty – how hard it is for a miner to create a new block – which is the second largest drop since the FTX collapse in 2022. On that occasion, 7% was wiped off Bitcoin’s mining layer as the SBF-induced cataclysm shook every corner of the industry.
“The 6% difficulty drop is an economically rational reaction by global miners to the hash price we’re seeing,” said Taras Kulyk, founder & CEO of SunnySide Digital, a data center provider for the Bitcoin mining industry.
“This is not pain for a majority of the miners, but a reprieve from the rapid hash rate gains we’ve been seeing,” he told The Defiant.
Kulyk’s voice echoed that of 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,” Power said, adding that “they will effectively be able to achieve higher BTC production.”
Halving Strains Network
Bitcoin mining is an energy-intensive process where specialized computers known as ASICs compete to find a random number within an astronomical range of numbers. Every ten minutes on average, a miner finds the number and receives a reward in BTC – which in turn secures the network.
According to protocol rules, every four years or 210,000 blocks, the network cuts the block rewards by half. This reduction aims to reduce the rate at which new bitcoin is generated, thus putting a limit on the supply of new BTC entering the ecosystem.
The event is usually accompanied by a large exodus of miners.
Large Miners Are Focused On Operational Efficiency
According to Kulyk, his team has observed that larger-scale digital miners have been focusing on operational efficiency gains over the last 2 months vs 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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