Bitcoin Halving Could Impact 20% of Current Hash Rate, With Older Mining Rigs at Risk
Summary:
Post the Bitcoin halving event, which halves block rewards, approximately 20% of the current Bitcoin hash rate may go offline, leaving only efficient mining rigs operational. Galaxy's report suggests that older mining rigs like Bitmain's S9, Canaan’s A1066, and MicroBT’s M32 models could be deactivated while popular models such as the Antminer S19 and S19J Pro, and Canaan’s A1246 are expected to survive. The prediction factors in future power prices, transaction fees as a percent of rewards and a Bitcoin price of $45,000. These changes, likely to be impacted by strategic business decisions, are scheduled to occur around April 20, at block number 840,000.
Approximately a fifth of the present Bitcoin (BTC) hash rate might be eliminated following the forthcoming Bitcoin halving, an event that will halve the block rewards and render only the most efficient mining machines operational. In late 2023, eight ASIC miner models were responsible for over 70% of Bitcoin's hash rate, according to industry analysts at Galaxy, referencing data from Coin Metrics in a report published on February 14. Due to the close relation between the breakeven points for these ASIC models, Bitcoin prices, and transaction fees as part of rewards, the report estimates that 15% to 20% of the network hash rate that comes from ASIC models may go offline.
The contemplation by Galaxy took into account potential future energy costs and determined the breakeven point for the mining rig models based on the predicted economics after the halving. This includes the block rewards dropping from 6.25 BTC to 3.125 BTC per mined block and transaction fees constituting 15% of rewards, assuming a Bitcoin price of $45,000.
On the less bold end of Galaxy's projections, almost all older mining rigs, including Bitmain's S9, Canaan’s A1066, and MicroBT’s M32 models, would likely be discontinued, while approximately half of MicroBT M20S and Bitmain S17 models will manage to keep running. These five models accounted for approximately 15% of Bitcoin’s hash rate at the end of 2023.
The Antminer S19 and S19J Pro, newer and popular models that contributed over half of Bitcoin’s hash rate in the previous year, and Canaan’s A1246 are expected to mainly survive; though a slight percentage of each could still be decommissioned when the running expenses are high.
A more alarming situation would see nearly all dated models approaching full deactivation. However, Galaxy once more speculates that Canaan’s A1246 and both the S19 models might be able to persist.
The analysts at Galaxy also pointed out that their estimations might be influenced by some strategic decisions. Miners using "outdated and less efficient machines" could likely resort to custom firmware to enhance their rig's efficiency and overall performance, while some miner models could be transfered to miners with lower energy costs instead of being decommissioned. Those utilizing older mining rigs might purchase the newer S19 models as replacements if the miners operating them can't continue to run them profitably.
The Bitcoin halving is scheduled to happen at block number 840,000, anticipated to be mined around April 20, according to data from Blockchair.
Published At
2/16/2024 9:05:46 AM
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