- Roughly 40-50 EH/s of Bitcoin mining equipment has shut down following the block halving
Crypto investors and speculators were enthusiastic when the Bitcoin block halving happened on 12 May 2020, since block halvings usually lead to major Bitcoin rallies. However, the mining sector of the crypto space was probably watching the block halving with anxiety and dread since Bitcoin price trends were not in their favor.
Essentially, when the block halving happened the block reward dropped from 12.5 Bitcoins to 6.25 Bitcoins, reducing mining revenue by 50% in terms of Bitcoin. In order for miners to survive such a blow unscathed, the USD value of Bitcoin would have had to double.
Unfortunately for miners, the price of Bitcoin stagnated between USD 8,000 to USD 10,000 instead of doubling, and therefore when the halving happened Bitcoin mining revenue collapsed by 50% or more. This wiped out profitability for a large fraction of mining farms in the world.
Indeed, the Bitcoin hash rate has dropped from a record high of 136 EH/s right before the halving to as low as 81 EH/s right after the halving. Since then the hash rate has been hovering between 80-100 EH/s.
This means that 40-50 EH/s of mining equipment had to be turned off after the halving due to lack of profitability, which is roughly 1/3rd of all of the mining rigs in the world.
Ultimately, this crash in hash rate is actually part of a paradigm shift. Basically, only giant corporate mining farms with access to subsidized power or their own power plants will be able to compete and be profitable in the mining sector, whereas almost all small to medium-sized mining farms owned by individuals have likely been wiped out. Certainly, the era of running a Bitcoin mining farm at home is over.
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