20% of Bitcoin hash rate could go offline after halving — Galaxy Digital

By Sunil Gavhane

Published on:

Bitcoin hash rate could go offline after halving — Galaxy Digital

Many older mining machines will have a hard time making money after Bitcoin rewards are cut in half in April, leading miners to shut them down, says a study from Galaxy Digital.

After the Bitcoin halving event, where the reward for mining is cut in half, up to 20% of the Bitcoin mining power might stop because only the most efficient miners will be able to continue.

By the end of 2023, eight ASIC miner models produced more than 70% of Bitcoin’s computing power, according to a report by Galaxy’s mining analysts on February 14th, which used Coin Metrics data.

The analysts said that because the profits for different ASIC models depend a lot on the price of Bitcoin and the transaction fees, we think that 15 to 20% of the total computing power from these ASIC models could be turned off.

Galaxy predicted future electricity costs for mining Bitcoin. It figured out the cost at which mining becomes profitable, considering new rules that reduce mining rewards from 6.25 to 3.125 Bitcoin, with transaction fees being 15% of the reward and a Bitcoin price of $45,000.

According to Galaxy’s more cautious predictions, almost all of the old mining machines, specifically the Bitmain’s S9, Canaan’s A1066, and MicroBT’s M32, will be turned off. Meanwhile, about half of the MicroBT M20S and Bitmain S17 models will keep running.

The five models made up about 15% of Bitcoin’s computing power by the end of 2023.

The Antminer S19 and S19J Pro, which are new and popular models that account for more than half of Bitcoin’s hash rate in 2023, and Canaan’s A1246, will mostly keep running. However, a few of them might shut down in places where it costs more to operate.

In a worse situation, most old models might almost stop working, but Galaxy thinks that Canaan’s A1246 and the two S19 models might still work.

Galaxy’s experts said their predictions might change because of some business choices.

Miners using old and less efficient machines will probably have special software to make their setup work better and produce more. Meanwhile, some miners might sell their machines to others who have lower energy costs instead of stopping their mining operations.

The analysts also thought that people using the newer S19 mining machines might not make money from them anymore. People with older mining machines might buy these newer ones as an upgrade.

The Bitcoin halving is set to happen when the 840,000th block is mined, which is likely to occur around April 20, based on Blockchair’s data.

Disclaimer: The information on this website isn’t meant to be taken as advice for investing money. Investing involves uncertainty, and there’s a chance you could lose your money when you invest.

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