Bitcoin Hashrate Hit New High This Week as Miners Shake Off Halving

Bitcoin’s
Bitcoin
network hashrate hit an all-time high this week, roughly one month out from Bitcoin’s most recent halving. This quadrennial event — which cut the number of newly issued bitcoin per block from 6.25 to 3.125 — has historically encumbered bitcoin miners with sagging margins and hindered hashrate growth. But 2024’s bullish market and new, highly-efficient bitcoin mining computers are helping miners defy the halving’s impact on their revenues.

On May 26, Bitcoin’s 7-day average hashrate — a measure of the total computing power on the Bitcoin network — hit 659 exahashes a second (EH/s). This means that Bitcoin miners are producing 659,000,000,000,000,000,000 computations per second to mine bitcoin and maintain the blockchain. That’s 659 quintillion computations per second — 87 times more than estimates for the grains of sand that constitute Earth’s beaches.

Related articles

No, Russia did not just lift its ban on domestic crypto use

30 July 2024

New US Bitcoin Mining Hardware Creates $20B Opportunity, Could Disrupt China’s Mining Dominance: Bernstein – Canaan (NASDAQ:CAN)

30 July 2024

The all-time high on May 26 was a 13.6% increase from Bitcoin’s post-halving low of 580 EH/s. It took 34 days from the date of Bitcoin’s fourth halving (April 22) for Bitcoin’s hashrate to post a new all-time high. After Bitcoin’s third halving in 2020, this recovery took 56 days, and after the second halving in 2016, it took 37 days.

Bitcoin miners have been more resilient this go-around partially because Bitcoin mining earning potential (dubbed hashprice) is holding up thanks to bitcoin’s market rally and an increase in transaction fees. It’s still much lower than it was before the halving, but it’s better than miners expected — and not so low that margins are absolutely decimated.

ADVERTISEMENT

Next-Generation Mining Computers Are Also Giving Miners a Boost

All things considered, Bitcoin mining profit margins are currently not as terrible as they could be, especially for miners with next-generation equipment.

Bitmain and MicroBT, the two leading companies in the mining hardware market, released their most powerful and energy efficient models in September and October of last year. These new models produce more hashrate than older models and they are more energy efficient, meaning that miners can produce more computing power per unit of electricity in a more cost-effective manner.

Bitcoin miners started deploying these new machines last quarter, and they’ve continued to do so. It’s reasonable to assume that most of the current hashrate growth comes from these new models. Take public bitcoin miners, for example. The leading public Bitcoin miners have placed orders for 76.6 EH/s of Bitcoin mining computers that are scheduled for delivery in 2024, the vast majority of which are models that Bitmain and MicroBT rolled out last year. 12.9 EH/s were scheduled for delivery in Q1, while another 36 EH/s are slated for Q2. These Bitcoin miners account for roughly 20% of the entire Bitcoin network, so when we factor in private miners, we can assume that even more hashrate from new models will come online this year.

As these new models come online, that will increase Bitcoin’s hashrate, which will in turn increase Bitcoin’s mining difficulty. Mining margins decrease as difficulty increases, because Bitcoin miners earn fewer BTC for their efforts as a result of the increased competition.

This creates a brutal cycle where, as margins compress, Bitcoin miners must deploy new, more-efficient equipment to shore up profits. But these computers are often more powerful than older models, so if enough Bitcoin miners deploy them, then Bitcoin’s total network hashrate rises, which leads to an increase in difficulty that further diminishes margins.

Bitcoin miners must consistently update their ASIC fleets to remain competitive. Miners will spend the rest of 2024 doing so, and it will force those miners with older equipment to unplug from the network if they can’t or won’t upgrade.