Bitcoin hash rate dips as miners turn off unprofitable ASICs post-halving

Despite the recent block reward halving, only the profitability of Bitcoin miners with less efficient mining rigs is endangered, according to Terawulf’s Nazar Khan.

Bitcoin hash rate saw a decline as Bitcoin mining firms have started turning off unprofitable mining rigs after the fourth Bitcoin halving.

The Bitcoin network’s hash rate fell to an over two-month low of 575 exahash per second (EH/s) on May 10 before making a small recovery to the current 586 EH/s, according to data from blockchain.com.

The hash rate drop can be attributed to the fact that “miners are beginning to turn off unprofitable rigs,” according to a May 13 X post by James Butterfill, the head of research at CoinShares.

The temporary drop was predicted by an April 19 report by CoinShares, which expects hash rate to surge during the next year. According to the report:

“Our model forecasts the hash rate rising to 700 exahash by 2025, although after the halving, it could fall by up to 10% as miners turn off unprofitable ASICs.”

The temporary reduction is attributed to the increased costs of Bitcoin (BTC) mining due to the halving, along with rising electricity costs, according to the report:

“Key mitigation strategies include optimizing energy costs, increasing mining efficiency, and securing favorable hardware procurement terms.”

Infrastructure and energy costs remain key for BTC mining profitability

Yet, according to Nazar Khan, the co-founder and COO of TeraWulf, only smaller mining operations with less energy-efficient equipment will be endangered after the 2024 halving. In an interview with Cointelegraph, Khan said:

“If you are a firm that just owns a bunch of machines and you are not profitable, you will be challenged. If you are a company that owns quality infrastructure that can deliver low-cost power, that’s a real asset and if anything the underlying value of that asset [BTC] has increased…”

TeraWulf is the world’s eighth largest Bitcoin mining company, worth over $670 million, according to Companiesmarketcap, planning to further expand its mining operations this year, despite the halving of block rewards.

Related: 10 days until halving: Bitcoin mining profitability won’t necessarily fall

However, the profitability of mining operations largely depends on the cost of electricity the companies are paying. The S19 XP and M50S++, two of the older ASIC models, operate at a loss with electricity costs above $0.09/kWh (Kilowatt-hour), according to a May 2 X post by Hashrate index.

“S19 XP & M50S++ will operate at a loss if the hash cost rises >$0.09/kWh. >$0.08/kWh k Pros & M50S+ will be unprofitable. And at $0.06-$0.07/kWh the S19j Pro+, j Pros, and M30S++ will struggle.”

Related: Runes are offering a significant lifeline for Bitcoin miners — TeraWulf COO