- Bitcoin’s hash rate has increased sharply since the halving
- BTC’s price drop also negatively impacted mining profitability
As expected, the cost of Bitcoin [BTC] Mining has risen sharply since last week’s halving, causing problems for a sector already suffering from falling profit margins.
According to Julio Moreno, head of research at on-chain analytics firm CryptoQuant, the hashing power required to produce one Bitcoin per day has now exceeded 1 exahash per second (EH/s) for the first time in history.
Source: CryptoQuant
Halving increases miners’ costs
Halvings attack a vital part of miners’ income – Fixed block rewards. The latter has reduced incentives from 6.25 BTC to 3.125 BTC per block. In simpler words, after each halving, miners must double their mining investments to break even.
This was further investigated by AMBCrypto using Glassnode data. The total number of Bitcoins produced fell from an average of 900 per day before the halving to between 400 and 500 since the event.
In addition, the hash rate (the computing power required to create and add new blocks to the Bitcoin ledger) increased significantly, reaching 721 EH/s earlier this week.
Source: Glassnode
Bitcoin’s price drop has consequences
What has compounded their woes is Bitcoin’s unimpressive performance on the price charts. After a brief bullish boost, the king coin slipped, with the crypto down 1.63% at the time of writing, according to CoinMarketCap.
Due to the aforementioned slump, the hash price, which is a barometer of Bitcoin mining profitability, fell 72% over the course of the week.
Source: Hash Rate Index
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Will costs come to the rescue?
While block rewards may become a non-viable revenue stream for miners, there is a lot to look forward to in terms of transaction fees.
AMBCrypto previously reported how the Runes Protocol led to an astronomical increase in fees immediately after the halving, offsetting the losses caused by the halving. In fact, about three-quarters of miners’ cumulative revenue on halving day was fees paid by users.