In a recent Twitter Spaces event held by CoinDesk as part of its Mining Week 2023, experts projected that the computing power on the Bitcoin network, also known as hash rate, could witness a significant decline of up to 30% following the next halving event anticipated in April 2024. With the halving scheduled to reduce the rewards received by miners for successfully mining a block from 6.25 BTC to 3.125 BTC, miners might be forced to shut down their rigs due to decreased profitability, potentially impacting the overall network’s hashrate.
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Lucas Pipes, the Managing Director at investment bank B. Riley Financial, estimated a possible 15% to 30% decline in Bitcoin’s hashrate after the halving. Colin Harper, head of content at Luxor Mining, a prominent mining services firm, also suggested a potential 20% drop in hash rate. The event is part of CoinDesk’s 2023 Mining Week.
The halving occurs approximately every four years and is a fundamental mechanism within Bitcoin’s blockchain that reduces the rewards miners receive for successfully adding new blocks. The halving aims to maintain the asset’s scarcity and support long-term value by controlling the supply economics. The upcoming halving will result in miners receiving half their current rewards, effectively doubling the cost of successfully mining a block.
To mitigate the impact of reduced rewards and maintain profitability, miners have been striving to upgrade their mining fleets with newer, more efficient machines. Newer generation machines require less power to mine a block successfully, which plays a critical role in reducing operational costs—the most substantial expense for miners. Minimizing power costs becomes crucial in surviving the halving and its subsequent effects on mining economics.
Over the past year, the BTC hash rate has experienced steady growth as more machines have come online to participate in the mining process. Additionally, the efficiency of mining machines has been advancing, with machines becoming approximately twice as efficient every five years.
Bitcoin Mean Hashrate | Source: Coinmetrics.io
As the Bitcoin community approaches the next halving, miners must carefully manage their operational costs and adopt more energy-efficient mining solutions to remain competitive in the market. The future dynamics of the network’s hashrate will heavily rely on miners’ adaptability and their ability to embrace technological advancements that optimize power consumption while maintaining the integrity and security of the Bitcoin network.
Source: CoinDesk
Read more: Can Bitcoin’s halving event lead to BTC Price next bull run?
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