Bitcoin halving fallout – ‘1st time in history’ update leaves miners wary

• Bitcoin hash rate has risen sharply since the halving
• The drop in BTC prices also affected mining profitability

As expected, the cost of mining Bitcoin (BTC) has risen sharply since last week’s halving, creating problems for an industry already suffering from declining 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.

Source: CryptoQuant

Halving increases miner spending

Halvings attack a critical part of miner revenue: fixed block rewards. The latest one reduced incentives from 6.25 BTC to 3.125 BTC per block. In simpler terms, after each halving, miners must double their mining investments to break even.

This was further investigated by AMBCrypto using data from Glassnode. The total number of Bitcoins produced has increased from an average of 900/day before the halving to between 400 and 500 since the event.

At the same time, the hash rate (the computing power needed to create new blocks and add them to the Bitcoin ledger) has increased significantly, reaching 721 EH/s earlier in the week.

Source: Glassnode

The fall in the price of Bitcoin has an impact

What added to their woes was Bitcoin’s unimpressive showing on the price charts. After a brief bullish impulse, the royal coin slipped, with the crypto down 1.63% at press time, according to CoinMarketCap.

In fact, due to the aforementioned drop, hashprice, which is a barometer of Bitcoin mining profitability, fell 72% over the week.

Source: Hash Rate Index

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Will fees come to the rescue?

Although block rewards are becoming an unviable source of income for miners, there is a lot to be expected from transaction fees.

AMBCrypto previously reported how the Runes Protocol led to an astronomical increase in fees immediately after the halving, helping to offset losses from the halving. In fact, about 3/4 of miners’ cumulative revenue from the day’s halving was comprised of fees paid by users.