Key Points
- Bitcoin mining cost has significantly increased post-halving, impacting the already strained mining industry.
- Transaction fees might become a promising revenue stream for miners despite declining block rewards.
The cost of mining Bitcoin (BTC) has seen a significant rise following last week’s halving, posing challenges for an industry already dealing with shrinking profit margins.
Julio Moreno, Head of Research at CryptoQuant, reports that the hash power needed to produce one Bitcoin per day has exceeded 1 exahash per second (EH/s) for the first time.
Halving’s Impact on Miners
Halvings directly affect miners’ revenue by reducing fixed block rewards. The recent halving slashed the incentives from 6.25 BTC to 3.125 BTC per block. In other words, miners need to double their mining investments post-halving to maintain profitability.
Data from Glassnode reveals that the total number of Bitcoins produced dropped from an average of 900/day before the halving to between 400 and 500 since the event.
Additionally, the hash rate or the computational power required to create new blocks and add them to the Bitcoin ledger, rose significantly, reaching 721 EH/s earlier in the week.
Bitcoin’s Price and Mining Profitability
The profitability of Bitcoin mining, measured by hashprice, fell by 72% over the week due to Bitcoin’s declining price. Bitcoin’s price performance has been less than stellar, with the cryptocurrency down by 1.63% at press time.
However, there is a silver lining for miners as transaction fees could become a viable revenue stream despite declining block rewards. The Runes protocol led to a significant surge in fees immediately after the halving, helping to offset losses from the halving. Around 3/4th of the total miner earnings from halving day were composed of fees paid by users.
