Bitcoin Hash Rate Declines as Mining Firms Shut Down Unprofitable Rigs Post-Halving
The hash rate of the Bitcoin network has experienced a significant decline as mining firms are shutting down unprofitable mining rigs following the fourth Bitcoin halving.
Data from blockchain.com reveals that the hash rate dropped to its lowest level in over two months, reaching 575 exahash per second (EH/s) on May 10. It has since made a small recovery and currently stands at 586 EH/s.
The decline in hash rate can be attributed to miners turning off rigs that are no longer profitable, James Butterfill, the head of research at CoinShares, explained in a recent post on X.
Miners are beginning to turn off unprofitable rigs
We write about it here in detailhttps://t.co/8tSQKDY5lk pic.twitter.com/498SvO01Bz
— James Butterfill (@jbutterfill) May 13, 2024
In a recent blog post, CoinShares predicted the temporary drop in Bitcoin hash rate.
However, the firm also expects the hash rate to surge in the coming years.
The increased costs of Bitcoin mining resulting from the halving, coupled with rising electricity costs, are cited as the main factors behind the reduction in hash rate.
The report suggests several mitigation strategies, including optimizing energy costs, improving mining efficiency, and securing favorable hardware procurement terms.
Nazar Khan, the co-founder and COO of TeraWulf, believes that only smaller mining operations with less energy-efficient equipment will face challenges after the 2024 halving.
TeraWulf, one of the world’s largest Bitcoin mining companies, worth over $670 million, plans to expand its operations despite the reduction in block rewards.
However, the profitability of mining operations heavily depends on the cost of electricity.
According to the Hashrate index, older ASIC models such as the S19 XP and
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