Cryptocurrencies

The Bitcoin hash rate has been declining as Bitcoin mining companies have begun shutting down operations

The Bitcoin hash rate saw a decline as Bitcoin mining companies started shutting down unprofitable mining rigs after the fourth Bitcoin halving.

The Bitcoin network hash rate fell to its lowest level in more than two months at 575 exahashes per second (EH/s) on May 10 before recovering slightly to the current 586 EH/s, according to data from blockchain.com.

The hash rate decline can be attributed to the fact that “miners have begun shutting down unprofitable rigs,” a May 13 report said. attack Written by James Butterville, Head of Research at CoinShares.

Source: blockchain.com

The temporary decline was predicted by a report released on April 19 by CoinShares, which expects the hashrate to rise over the next year. According to the report:

“Our model predicts the hash rate will rise to 700 exahashes by 2025, although after the halving, it may decline by up to 10% as miners turn off unprofitable ASIC hardware.”

The temporary reduction is due to increased Bitcoin (BTC) mining costs due to the halving, along with higher electricity costs, according to the report:

“Key mitigation strategies include improving energy costs, increasing mining efficiency, and securing favorable hardware procurement terms.”

Infrastructure and energy costs remain key to the profitability of Bitcoin mining

However, according to Nazar Khan, co-founder and COO of TeraWulf, only smaller mining operations with less energy-efficient equipment will be at risk after the halving in 2024. In an interview with Cointelegraph, Khan said:

“If you are a company that owns a bunch of machines and is not profitable, you will face a challenge. If you are a company that has high-quality infrastructure that can provide low-cost energy, that is a real asset, and if anything the fundamental value of that asset (BTC) has increased…”

TeraWulf is the world’s eighth-largest bitcoin miner, worth more than $670 million, according to Companiesmarketcap, and plans to expand its mining operations this year, despite cutting block rewards by half.

Related: 10 days until halving: Bitcoin mining profitability will not necessarily decrease

However, the profitability of mining operations depends largely on the cost of electricity paid by companies. The S19 Hashrate indicator.

“S19 XP and M50S++ will operate at a loss if retail cost rises > $0.09/kWh. > $0.08/kWh k Pros & M50S+ will not be profitable. At $0.06-$0.07/kWh, the S19j Pro+, j Pros and M30S++ will struggle.

source: Hashrate indicator

Related: Runes Provide Important Lifeline for Bitcoin Miners — TeraWulf COO

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