- Bitcoin’s hash rate has increased significantly since the halving
- BTC’s price drop also negatively affected mining profitability
As expected, the cost of Bitcoin (BTC) mining has risen sharply since last week’s halving, creating problems for an industry already suffering from shrinking profit margins.
According to Julio Moreno, head of research at on-chain research 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 an important part of miners’ income – fixed block rewards. The latest reduced the incentives from 6.25 BTC to 3.125 BTC per block. In simpler words, after each halving, miners must double their mining investment to break even.
This was further investigated by AMBCrypto using Glassnode data. The total number of Bitcoins produced dropped from an average of 900/day before the halving to between 400 and 500 since the event.
At the same time, the hash rate (the computational power needed to create new blocks and add them to the Bitcoin ledger) increased significantly, hitting 721 EH/s earlier this week.
Source: Glass node
Bitcoin’s price drop matters
What has added to their woes is Bitcoin’s unimpressive showing on the price charts. After a brief bullish impulse, the king coin fell, with the crypto down 1.63% at press time, according to CoinMarketCap.
In fact, the hash price, which is a barometer of the profitability of Bitcoin mining, fell by 72% during the week due to the aforementioned downturn.
Source: Hash Rate Index
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Do fees come to the rescue?
While block rewards may be becoming an unsustainable revenue stream for miners, there is much to look forward to from transaction fees.
AMBCrypto previously reported how the Runes protocol led to an astronomical increase in fees immediately after the halving, which helped offset the losses from the halving. In fact, about 3/4 of the cumulative miner earnings from the halving day were composed of fees paid by users.
