- Bitcoin’s hash rate has risen sharply since the halving
- BTC’s price decline adversely affected mining profitability too
As expected, the cost of Bitcoin [BTC] mining has risen sharply since last week’s halving, creating problems for an industry already suffering from declining profit margins.
According to Julio Moreno, Head of Research at on-chain analytics firm CryptoQuant, the hash power required to produce one Bitcoin per day has now surpassed 1 exahash per second (EH/s) for the first time in history.
Source: CryptoQuant
Halving increases miners’ expenses
Halvings attack a vital component of miners’ revenue – Fixed block rewards. The latest one slashed the incentives from 6.25 BTC to 3.125 BTC per block. In simpler words, after each halving, miners have to double their mining investments to break even.
This was further scrutinised by AMBCrypto with the help of Glassnode data. The total number of Bitcoins produced fell from an average of 900/day before the halving to between 400 and 500 since the event.
Alongside the same, the hash rate (The computational power needed to create new blocks and add them to the Bitcoin ledger) rose significantly, hitting 721 EH/s earlier in the week.
Source: Glassnode
Bitcoin’s price decline has a bearing
What has added to their woes is Bitcoin’s unimpressive show on the price charts. After a brief bullish impulse, the king coin slipped, with the crypto down 1.63% at press time, according to CoinMarketCap.
In fact, because of the aforementioned slump, hashprice, which is a barometer of Bitcoin mining profitability, fell by 72% over the week.
Source: Hash Rate Index
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Will fees come to the rescue?
While block rewards may be becoming an unviable revenue stream for miners, there is much to look forward to from transaction fees.
AMBCrypto reported previously how the Runes protocol led to an astronomical surge in fees immediately after the halving, helping offset the losses from the halving. In fact, around 3/4th of the cumulative miner earnings from halving day were composed of fees paid by users.