Up to 20% of Bitcoin’s present hash rate may cease operation following the Bitcoin halving, as block rewards diminish and only the most efficient mining rigs persist.
Towards the conclusion of 2023, approximately 70% of the Bitcoin hash rate stemmed from eight ASIC miner models, as indicated by Galaxy’s mining analysts in a report dated February 14, citing Coin Metrics data.
“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 – 20% of network hash rate coming from the ASIC models […] could come offline,” the analysts articulated.
Galaxy’s forecast considered potential future power costs.
It computed the breakeven threshold for mining rig models based on “post-halving economics,” with each mined Bitcoin block slated to halve rewards from 6.25 BTC to 3.125 BTC, “transaction fees constituting 15% of rewards and a Bitcoin price of $45,000.”
According to Galaxy’s more conservative projections, nearly all outdated mining rigs — particularly Bitmain’s S9, Canaan’s A1066, and MicroBT’s M32 models — would be decommissioned, while about half of MicroBT M20S and Bitmain S17 models would persist online.
These five models collectively accounted for roughly 15% of Bitcoin’s hash rate by the end of 2023.
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Enduring predominantly would be the Antminer S19 and S19J Pro, newer and more prevalent models that comprised over half of Bitcoin’s hash rate in 2023, alongside Canaan’s A1246, albeit a minor fraction of each might still deactivate in locales with elevated operational expenses.
Nevertheless, a bleaker scenario would witness almost all older models nearing complete deactivation, although Galaxy once more anticipates that Canaan’s A1246 and both S19 models might endure.
Galaxy’s analysts acknowledged that their estimates could be influenced by certain business choices.
Miners utilising “older and more inefficient machines” are likely to implement bespoke firmware to enhance their rig’s efficiency and yield, whilst certain miner models may transition to miners with more economical power costs instead of shutting down.
The analysts also speculated that miners employing the newer S19 models might struggle to maintain profitability, and those employing older mining rigs might purchase them as an upgrade.
The Bitcoin halving will be enacted at block number 840,000, anticipated to be mined around April 20, according to data from Blockchair.
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