Bitcoin’s Price Bounces Back, but Miners Shutting Down Post-Halving

While Bitcoin’s price is bouncing back fast after its pre-halving drop, some miners are leaving the network. After the low price of $8,100 observed on Sunday, just a day before Bitcoin had to undergo the third mining reward halving, the top cryptocurrency in the market was changing hands at $9,730. This is a gain of 20% and it eased more than 75% of the price drop that had been seen in the three days till May 10 when Bitcoin went from $10,500 to $8,100. But, even though the price has made a recovery, the hash rate of the cryptocurrency, which is the total computing power used for mining blocks on the blockchain, has seen a decline to 98 exahashes (EH/s).

According to the numbers, this marks a reduction of 27% from Monday when the hash rate had been 135 EH/s. Rapid fluctuations in the one-day hash rate is quite common and they don’t provide a lot of useful information regarding the broader trend. Thus, most people prefer to rely on the seven-day average of the hash rate, which can iron out daily fluctuations. However, even that average has declined to 114 EH/s from the high of 122 EH/s pre-halving.

This fall in the hash rate indicates that some miners have shut down or scaled back operations after the halving of block rewards on Monday from 12.5 BTC to 6.5 BTC. Due to this decline, returning a profit has become harder or even impossible for miners with older mining equipment. This argument is validated through the recent uptick in the average time taken for mining a block i.e. the mean block interval time. On Sunday, this mean block interval time had been 8.5 minutes, but it rose on Wednesday by 727 seconds to reach 12 minutes.

It was expected that some miners would leave the network after the halving, particularly those who were using older generation mining devices, such as Bitmain’s Antminer S9s. The seven-day average hash rate has declined by 6.5% so far, but if the price of Bitcoin continues to rise, then it might be worth switching on the older generation machines, especially as the cost of electricity is expected to go down. However, even if Bitcoin prices increase to $13,760, operating the Antminer S9 would still result in a slight loss. But, a move above $13,000 doesn’t look likely right now, but one over $10,000 cannot be ruled out.