Bitcoin Mining Processing Power Could Drop by Up to 30% After Halving: Experts
The processing power of the Bitcoin network (known as the hashrate) could drop by up to 30% after the next halving, which is expected in April 2024. This was revealed by experts in a Twitter Space on Wednesday as part of Mining Week 2023.
Lucas Pipes is Managing Director of B. Riley Financial. He estimates a 15 to 30 percent drop in Bitcoin hashrate. Colin Harper, head of content at mining services company Luxor Mining, said a 20% drop is possible.
The bitcoin rewards that miners receive for successfully mining a block are roughly halved every four years. This is done to control the supply economy of the blockchain. The halving is the name of this event. The reward per block will be reduced from the current 6.25 BTC to 3,125 BTC.
The cost of mining a successful block doubles as the rewards are halved. This would result in miners who are not profitable shutting down their machines unless Bitcoin prices spike dramatically.
To achieve this, miners are trying to switch to newer generation machines that require less power to mine successfully. The biggest operating expense for miners is usually electricity costs. Therefore, minimizing these costs will be key to surviving the halving.
As more and more machines come online, the hash rate increases. The efficiency of machines doubles about every 5 years.
