Anticipated decrease in hashing power of the Bitcoin network – caused by the upcoming halving

16 February 2024 | 06:40

Galaxy Digital Analysts Predict Decline in Bitcoin Network Hash Rate Ahead of Halving

Analysts at Galaxy Digital are forecasting a potential 20% decrease in the hash rate of the Bitcoin network leading up to the halving event scheduled for April this year. The halving, which entails cutting the block reward in half, is expected to affect specific mining machine models and lower the overall hash rate of the network.

Reduction in Block Rewards Due to the Halving

Following the halving, block rewards will be reduced from 6.25 to 3.125 bitcoins. It is anticipated that this change will incentivize miners to seek greater efficiency and cost reductions to mitigate the negative impact of lower rewards. Currently, the hash rate of the Bitcoin network stands at around 515 exahashes per second (EH/s).

Forecasts Regarding the Bitcoin Network Hash Rate

According to analysis, around 15-20% of the network’s hash rate may go offline post-halving, equivalent to approximately 86-115 EH. Analysts estimate that by the end of 2023, the hash rate of the network will range between 675 and 725 EH.

The Halving Process and the Cryptocurrency Market

A substantial supply shock of Bitcoin is anticipated prior to the halving, taking into account the new block subsidy, transaction fees comprising 15% of rewards, and a Bitcoin price of $45,000 (compared to the current value of around $52,000). The analysis also considers future energy prices and costs for public miners.

Cryptocurrency Market Predictions

It is projected that in May, the hash rate will decrease to an average of 500 EH/s from an estimated 565 EH/s in April. The average Bitcoin price is assumed to be $55,000 pre-halving and rise to $57,500 post-halving. Companies such as Riot Platforms and Bitfarms have made significant investments in mining infrastructure in anticipation of the halving and a market rebound in the second half of 2023.

Analysts’ Perspective on Miners’ Situation

“We believe miners with minimal or no debt, low energy costs, and efficient mining fleets will fare well,” stated White. “While we expect challenges for all, especially early on as miners near profitability margins strive to persevere before adjusting their operations.”