As the Bitcoin halving gets nearer, more miners than ever are trying to get the most out of the network as possible. What happens after?
The Bitcoin halving is coming, and the Bitcoin mining industry is thriving amidst what appears to be a turning point for the industry.
Just days before Bitcoin block rewards are reduced by 50%, the Bitcoin network has reached its strongest point ever, measured in mining hash rate.
According to data compiled by analytics firm Glassnode, the one-day average mining hash rate of the Bitcoin blockchain reached 139 exahashes per second (EH/s), trouncing the previous all-time high.
#Bitcoin hash rate hit a new all-time high. pic.twitter.com/XtPbZRU8wp
— glassnode (@glassnode) May 3, 2020
For perspective, this increase in hash rate represents the equivalent of more than 71,000 new Antminers S9 machines on the network—the most popular Bitcoin miner, which can each pump out a hash rate of 13.5 TH/s.
The Bitcoin mining industry has been on a wild ride so far this year. As Bitcoin recovered from the Crypto Winter of 2018, the network consistently hit new all-time highs in hash rate month over month.
That all came to a screeching halt on Black Thursday, when the coronavirus-induced panic crashed the market on March 12. And when the price of Bitcoin collapsed, so did the mining industry, as profitability flew out the window.
This wiped out a significant portion of the BTC hash rate, which in turn contributed to one of the most dramatic drops in the network’s difficulty ever. When there is low mining activity, the Bitcoin algorithm automatically reconfigures itself to lower its difficulty and make mining more profitable. As a result, an average of 1 new block is produced every 10 minutes.
But the strongest incentive for miners to jump back in has been Bitcoin’s recent price performance. Bitcoin has since recovered from the Black Thursday crash to become the best-performing asset of 2020 so far—even outperforming gold. (Sorry, Peter Schiff.)
As Bitcoin mining becomes more profitable, mining activity increases, as reflected by the new all-time high hash rate. And it’s also possible that, as the Bitcoin halving approaches, miners are currently trying to extract as much Bitcoin as possible before their profits are cut in half.
How many of these miners will stick around after the Bitcoin halving? We’ve got just over a week to find out.
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