Will Bitcoin’s Hash Rate Drop by 20% Ahead of Next Halving? (Research)

As Bitcoin’s highly anticipated halving event approaches, new research from Galaxy Digital suggests that up to 20% of the cryptocurrency’s current hash rate could go offline.

This reduction is expected to impact eight specific ASIC mining machine models, leading to a drop in the network’s overall hash rate.

Galaxy Digital’s Projections

Galaxy’s mining analysts revealed that by the end of 2023, over 70% of Bitcoin’s hash rate was being generated by just eight ASIC miner models. According to the paper, these models are susceptible to fluctuations in Bitcoin price and transaction fees. As a result, between 15% to 20% of the hash rate produced by these ASIC models could go offline post-halving.

According to the projections, in a less severe scenario, older and less efficient models such as Bitmain’s S9, Canaan’s A1066, and MicroBT’s M32 may face near-complete shutdowns. In contrast, around half of MicroBT M20S and Bitmain S17 models will manage to stay online.

Newer and highly efficient models such as the Antminer S19 and S19J Pro, which accounted for more than half of Bitcoin’s hash rate in 2023, and Canaan’s A1246, are anticipated to withstand the halving. Nevertheless, some models may still go offline in regions with elevated operational expenses.

A worst-case scenario could see most older models going offline, but Galaxy suggests Canaan’s A1246 and both S19 models may survive.

Galaxy’s analysts caution that outcomes could be affected by business decisions. Some miners may opt for custom firmware to boost efficiency, while others could sell to miners with cheaper power. Miners using newer S19 models might struggle, potentially prompting sales or upgrades.

The Bitcoin halving, expected to occur on or around April 20 at block number 840,000, will decrease block rewards from 6.25 to 3.125. These predictions consider the reduced block rewards, 15% transaction fees, and a Bitcoin price of $45,000, compared to the current $52,000. Future power costs and expenses from public miners were also considered.

Bitcoin Miners Ramp Up Investments

Meanwhile, despite the upcoming challenges, the anticipation of the halving has spurred significant investments in mining infrastructure. Companies like Riot Platforms and Bitfarms have expanded their mining capabilities through substantial mining equipment purchases, betting on a rebound in the cryptocurrency market.

In December, Riot Platforms made a substantial investment, purchasing 66,560 MicroBT machines for $290.5 million, with an additional option to acquire up to 265,000 more MicroBT miners.

Bitfarms also announced plans to enhance its mining fleet by adding 36,000 Bitmain T21 miners. These strategic moves aim to improve efficiency, reduce production costs per unit, and expand hash rate capacity.


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