Bitcoin’s hash rate experienced a decline following the fourth Bitcoin halving, as mining firms started shutting down unprofitable mining rigs. On May 10, the hash rate dropped to a two-month low of 575 exahash per second (EH/s), but has since recovered to the current rate of 586 EH/s, according to data from Blockchain.com.
James Butterfill, head of research at CoinShares, stated in a May 13 X post that the drop in hash rate can be attributed to miners turning off rigs that are no longer profitable. This temporary decline was predicted in an April 19 report by CoinShares, which also expects the hash rate to surge next year.
The report explains that the temporary reduction in hash rate is a result of increased costs associated with Bitcoin mining after the halving, as well as rising electricity costs. The profitability of mining operations is greatly influenced by infrastructure and energy costs.
Nazar Khan, co-founder and chief operating officer of TeraWulf, expects only smaller mining operations with less energy-efficient equipment to be at risk after the 2024 halving. In an interview with Cointelegraph, Khan stated that TeraWulf, the world’s eighth-largest Bitcoin mining company valued at over $670 million, plans to expand its mining operations this year despite the halving of block rewards.
However, the profitability of mining operations is heavily dependent on the cost of electricity. The older ASIC models, such as the S19 XP and M50S++, operate at a loss when electricity costs exceed $0.0 per kilowatt-hour, according to a May 2 X post by Hashrate Index.
Overall, Bitcoin’s hash rate has experienced a temporary decline due to the shutting down of unprofitable mining rigs. However, the industry is expected to recover and see a surge in hash rate in the coming years. The profitability of mining operations depends on various factors, including electricity costs. TeraWulf, despite the halving, remains optimistic and plans to expand its mining operations.