Bitcoin Halving Fallout – 'For the First Time in History' Update Leaves Miners Wary

  • Bitcoin hash rate has risen sharply since the halving
  • The decline in BTC prices has negatively impacted mining profitability as well

As expected, the cost of Bitcoin [BTC] Mining has risen sharply since its halving last week, creating problems for an industry already suffering from low profit margins.

According to Julio Moreno, head of research at on-chain analytics firm CryptoQuant, the hashing power required to produce one bitcoin per day has now exceeded 1 exahash per second (EH/s) for the first time in history.

Bitcoin hash power

Source: Cryptoquant

Half increases miners' expenses

Halving attacks a vital component of miners' revenues – fixed block rewards. The latter reduced incentives from 6.25 BTC to 3.125 BTC per block. In simpler terms, after each halving, miners have to double their mining investment to break even.

This was further examined by AMBCrypto with the help of Glassnode data. The total number of bitcoins produced has fallen from an average of 900/day before the halving to between 400 and 500 since the event.

Along with this, the hash rate (the computational power needed to create new blocks and add them to Bitcoin's ledger) rose significantly, reaching 721 exahashes/second earlier in the week.

Bitcoin mining revenue

Source: Glassnode

The decline in the price of Bitcoin has an impact

What added to their problems was the unimpressive display of Bitcoin on the price charts. After a short bull run, the Kingcoin retreated, with the cryptocurrency down 1.63% at press time, according to CoinMarketCap.

In fact, due to the aforementioned recession, the hash price, a measure of Bitcoin mining profitability, fell by 72% during the week.

Bitcoin hash price

Source: Hash rate index

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Will fees come to the rescue?

While block rewards may become a less viable source of revenue for miners, there is a lot to look forward to from transaction fees.

AMBCrypto previously reported on how the Runes Protocol led to an astronomical increase in fees immediately after the halving, which helped offset the losses caused by the halving. In fact, about 3/4 of the miner's cumulative profits from the half-day were comprised of fees paid by users.

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