Bitcoin Hash Rate Could Drop 20% Post-Halving

Bitcoin halving could cause up to 20% of Bitcoin hash rate to go offline according to Galaxy’s mining analysts.

Following the Bitcoin halving, which will result in block rewards being cut in half and leaving only the most effective mining rigs remaining, it is possible that as much as 20% of Bitcoin hash rate will experience a loss of operation.

According to a report published by Galaxy’s mining analysts on February 14, 2023, which cited data from Coin Metrics, 8 ASIC miner models were responsible for producing more than 70 percent of the Bitcoin hash rate by the end of the year 2023.”

Given how sensitive the breakevens are for the various ASIC models to Bitcoin price and transaction fees as a percent of rewards, we estimate that between 15 and 20% of the network Bitcoin hash rate coming from the ASIC models could come offline,” the analysts stated.

“This is because the breakevens are sensitive to the price of Bitcoin. “For its prediction, Galaxy analyzed potential future electricity prices.

With each mined Bitcoin block set to slash payouts from 6.25 BTC to 3.125 BTC, “transaction fees making up 15% of rewards and a Bitcoin price of $45,000, it is computed that the breakeven threshold for the mining rig models based on “post-halving economics.” This was done under the assumption that the Bitcoin price would be $45,000.

On the more conservative end of Galaxy’s estimations, practically all of the older mining rigs specifically Bitmain’s S9, Canaan’s A1066 and MicroBT’s M32 models will be shut down. On the other hand, approximately half of the MicroBT M20S and Bitmain S17 models can remain online.

Towards the end of the year 2023, the five models collectively accounted for approximately 50% of Bitcoin hash rate of Bitcoin.

Although a tiny percentage of each could still fall offline in regions where operational expenses are higher, the Antminer S19 and S19J Pro which are newer and more popular models that made up more than half of Bitcoin hash rate in 2023, would be the ones that would survive the most.

Canaan’s A1246 would also be among the models that survived. In contrast, a more serious situation would see practically all older models going close to completely down.

However, Galaxy once again expects that Canaan’s A1246 and both S19 models may be able to survive these circumstances. In their analysis, Galaxy’s analysts pointed out that their projections might be affected by particular business choices.

To enhance their rig’s efficiency and production, miners that operate “older and more inefficient machines” would most likely have custom firmware installed.

Furthermore, some mining models may “change hands to miners with lower power costs” rather than going offline. Additionally, the researchers hypothesized that miners who were using the more recent S19 models could be unable to continue and that miners who were using earlier mining rigs might be able to purchase them as an upgrade.

According to information provided by Blockchair, the Bitcoin halving will go into effect at block number 840,000 which is anticipated to be mined on or around April 20.