Bitcoin Miners Start Scaling Back Operations Post Halving, Data Indicates

Bitcoin Mining Firms Adapt to Changing Landscape

Bitcoin mining firms are making strategic adjustments to their operations following a significant revenue crunch in the industry. The latest data from a Coinshares report indicates a noticeable scaling back of computer fleets among these firms.

Decline in Bitcoin Network Hash Rate

One key indicator of this shift is the decline in the seven-day rolling average for the Bitcoin network hash rate. After reaching a peak of approximately 650 exahashes per second (EH/s) on April 19, the hash rate has since dropped to 586 EH/s as of May 11.

Impact of Bitcoin Halving on Miner Profitability

The recent Bitcoin halving event, which reduced the subsidy attached to each Bitcoin block, has had a significant impact on miner profitability. This reduction, from 6.25 BTC to 3125 BTC per block, represents a nearly 50% decrease in net miner revenue.

As a result, miners are facing the challenge of optimizing their operations to maintain profitability. Strategies such as reducing energy costs, improving mining efficiency, and managing financial liabilities are being actively pursued by industry players.

Response from Publicly Listed Bitcoin Miners

Publicly listed Bitcoin miners, based on Q4 2023 reporting figures, had an average BTC production cost of $53,000 per coin immediately after the halving. Despite the reduced revenue, miners remain profitable, albeit at a lower margin compared to previous levels.

Some mining firms, such as Marathon Digital (MARA) and Riot Platforms (RIOT), have already started curtailing activities to adapt to the changing landscape. The focus is on cost optimization and operational efficiency to sustain profitability in the current market conditions.

Exploring New Revenue Streams

In response to the evolving market dynamics, miners are exploring new revenue streams such as transaction fees. Recent data suggests that transaction fees have become a more significant component of miner revenue, increasing from 1% to 7% over the past two years.

Overall, the Bitcoin mining industry is undergoing a period of adjustment and innovation as companies navigate the changing economic landscape and seek sustainable business models.