The Halving Effect: Bitcoin Hashrate Decreases as Miners Prepare for Probable Difficulty Drop

Just over two weeks have passed since the fourth Bitcoin halving took place. During this period, the network’s hashprice dropped from over $100 per petahash to below $45 at the beginning of May. It has since increased to $50 per petahash. Despite the modest rebound, the network’s total hashrate has experienced a decrease, with a reduction of about 50 exahash since the halving event.

Bitcoin Hashrate Wanes Post-Halving

This weekend, Bitcoin’s total hashrate is maintaining levels around 600 exahash per second (EH/s), occasionally fluctuating slightly below and above this mark. This decline follows the all-time high in hashrate that occurred just before the fourth reward halving on April 19, 2024, when it peaked at 655 EH/s. Since that milestone, approximately 50 EH/s have gradually diminished.

Bitcoin total hashrate as of May 5, 2024.

This decrease in hashrate corresponds with the value of hashing power reaching lows not observed in several years. On May 5, 1 petahash per second (PH/s) of hashpower per day is $50. The downturn in hashprice began about two weeks ago, while the noticeable decline in the hashrate commenced around seven days ago on April 27. Over the last 2,016 blocks, the network has averaged roughly 622.5 EH/s.

The decline in hashrate has led to lengthier block intervals, which could result in a difficulty reduction on May 8, 2024. Projections suggest a potential 3.4% decrease in difficulty at the next retarget. Following the halving, the block subsidy decreased from 6.25 BTC to 3.125 BTC. Since then, the average fees per block have been around .90 BTC to 1.01 BTC.

Should the price fail to increase, we might witness further reductions in the hashrate. Conversely, BTC miners have mitigated some risks by updating their equipment to more efficient models. Enhanced joules per terahash and elevated revenues during March and April may provide a substantial financial cushion for these operators. Looking ahead, the potential difficulty reduction could help recalibrate operations, influencing miner profitability in this new subsidy era.

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