The upcoming Bitcoin (BTC) halving is getting closer. In April, rewards for Bitcoin miners will be halved. This event will make the playing field much more competitive for miners. According to a study by Galaxy Digital, 20 percent of mining computing power will disappear after the halving.
Hasrate will drop by 20 percent
Currently, 70 percent of Bitcoin mining’s total computing power, the hashrate, comes from ASIC mining rigs. According to Galaxy Digital, not all of these mining rigs will remain profitable after the halving.
“Based on the breakeven sensitivity of the various ASIC models, we estimate that between 15 and 20 percent of the network hashrate derived from these ASIC models could go offline.”
Some miners are no longer powerful enough to remain profitable after the halving. According to Galaxy, a large proportion of older mining computers will be decommissioned after the halving. This mainly affects the models Bitmain S9, Canaan A1066, MicroBT M32, MicroBT M20S and the Bitmain S17.
By the end of 2023, these five older models were responsible for 15 percent of the Bitcoin hash rate. Therefore, there is a good chance that these models will no longer be used within a few months. However, this is an estimate. Of course, whether a model is taken out of circulation also depends on the operating costs. These costs may vary depending on the area.
Additionally, some older models are being relocated to areas where operating costs are lower and they can remain profitable. Other older models are modified to remain operational.
Bitcoin miners are preparing
However, the majority of active mining equipment, around 80 percent, consists of newer models, which will still suffice even after the halving. Bitcoin mining companies have been anticipating the upcoming halving for some time and have already invested heavily in new equipment.
After the BTC price surge late last year, many miners invested their profits in new equipment. According to a December study, the Bitcoin mining sector has already invested billions of dollars in preparation for the halving. As mentioned above, after the halving, margins will narrow and only the best prepared and best equipped companies will survive.