Bitcoin hash rate dips as miners turn off unprofitable ASICs post-halving

The hash rate of Bitcoin witnessed a decline as mining firms began shutting down unprofitable mining rigs following the fourth Bitcoin halving.

On May 10, the Bitcoin network experienced a significant drop in hash rate, reaching a low of 575 exahash per second (EH/s) before marginally recovering to the current level of 586 EH/s, as per data from blockchain.com.

Reasons Behind Hash Rate Decline

The decrease in hash rate is attributed to mining firms switching off unprofitable rigs, as highlighted in a post by James Butterfill, the head of research at CoinShares, on May 13.

A report by CoinShares on April 19 had predicted a temporary reduction in hash rate post-halving, expecting a surge in the coming year, with a forecasted rise to 700 exahash by 2025.

Increased Bitcoin mining costs due to the halving and rising electricity expenses have contributed to the hash rate decline, necessitating mitigation strategies such as optimizing energy costs and improving mining efficiency.

Impact on Mining Operations

Smaller mining operations with less energy-efficient equipment may face challenges post-2024 halving, according to Nazar Khan, co-founder and COO of TeraWulf, although companies with quality infrastructure and low-cost power may still thrive.

Despite the halving of block rewards, TeraWulf, ranked as the world’s eighth largest Bitcoin mining company, plans to expand its operations this year, leveraging its infrastructure and asset value.

The profitability of mining operations heavily depends on electricity costs, with older ASIC models like S19 XP and M50S++ operating at a loss if electricity costs exceed $0.09/kWh, as indicated in a post by Hashrate index on May 2.