Bitcoin Halving Can Put 20% of Hashrate Offline

The upcoming Bitcoin halving, slated to slash block rewards in half, is anticipated to trigger a significant offline shift in Bitcoin's hash rate, potentially affecting up to 20% of the current hash rate.

This impending change is expected to leave only the most efficient mining rigs operational in the aftermath.

Impact on Mining Rig Models

As of December 2023, a substantial portion of Bitcoin's hash rate, exceeding 70%, was generated by eight specific ASIC miner models, as per data sourced from Coin Metrics.

Galaxy's analysts project that due to the sensitivity of breakevens for various ASIC models to factors such as Bitcoin price and transaction fees, approximately 15% to 20% of the network hash rate derived from these models could be taken offline.

Galaxy's forecast is based on an analysis of potential future power prices and the breakeven points for mining rig models under "post-halving economics."

With each mined Bitcoin block set to halve rewards from 6.25 BTC to 3.125 BTC, alongside transaction fees constituting 15% of rewards and a Bitcoin price assumption of $45,000, the analysts predicted the likely outcomes.

According to Coin Telegraph, nearly all older models could go offline in a more dire scenario. However, Galaxy anticipates that newer models like Canaan's A1246 and the S19 series might persevere to some extent.

Factors Influencing Outcomes

Galaxy's analysts acknowledged that various business decisions could influence their estimates.

According to Crypto News, miners operating older and less efficient machines may opt for custom firmware to enhance efficiency. At the same time, some may transfer these machines to miners with more affordable power costs instead of discontinuing operations entirely.

Additionally, miners using newer S19 models might face challenges in maintaining profitability, potentially leading to older mining rigs being acquired as upgrades. As the Bitcoin halving approaches, slated to occur around April 20th, the industry awaits the unfolding dynamics of hash rate distribution and the consequent impact on Bitcoin mining operations.

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