Bitcoin's hash rate experienced its second significant decline of the year following the halving. Hashing power in the network has dropped by over 20% in the past 2 weeks after the Bitcoin block reward was reduced from 12.5 to 6.25 BTC per block.

Bitcoin has experienced a second rapid decrease in hash rate as a result of the halving (Glassnode Studio)

When the price of BTC crashed in March, we saw a similar decline in hash rate as miner revenue in USD terms decreased by over 50%, driving many operations to switch off their machines until difficulty readjusted and the price recovered.

Miner revenue post-halving has followed a similar pattern as occurred during the 50% price crash (Glassnode Studio)

Just when miner revenue and hash rate were recovering to previous levels, the halving slashed miner revenue from block rewards by half, initiating a similar effect as the 50% BTC price decrease in March; as it becomes harder to mine BTC profitably, hash rate is declining.

However, this decline is slowing and gradually reversing, as Bitcoin just experienced a downward difficulty adjustment, making mining slightly more accessible for smaller players again.

Bitcoin just experienced a 5% decrease in difficulty as a result of the declining hash rate (Glassnode Studio)

The effect of the halving on miners is also being mitigated by an increase in fees, as miners prioritize transactions which offer higher fees in order to make up for the shortfall.

Miners are now generating over 15% of their revenue from fees (Glassnode Studio)

However, even with more revenue coming in via fees, it will take a larger difficulty decrease - or more hopefully an increase in the price of BTC - to make Bitcoin mining profitable again for many of the smaller miners.


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