Credit: Shutterstock/Nattawat Juntanu
While bitcoin is fast reversing its pre-halving price drop, some miners still look to be leaving the network.
At time of writing, the top cryptocurrency by market value is , representing a 20% gain on the low of $8,100 observed Sunday – the day before Bitcoin underwent its third mining reward halving.
The bounce has erased more than 75% of the drop from $10,500 to $8,100 seen in the three days to May 10.
While the price has recovered a major portion of the lost ground, the cryptocurrency’s hashrate (the total computing power dedicated to mining blocks on the blockchain) has declined to 98 exahashes (EH/s) – that’s down 27% from the high of 135 EH/s observed on Monday, according to data source .
The one-day hashrate often sees rapid fluctuations and provides less useful information about the broader trend. Hence, most observers prefer the seven-day average of the hashrate, which smooths out daily fluctuations.
That average, too, has dropped to 114 EH/s from the pre-halving high of 122 EH/s, according to data provided by blockchain intelligence firm .
The decline in the hashrate suggests some miners have scaled back or shut down operations following Monday’s halving of block rewards from 12.5 BTC to 6.25 BTC, which makes returning a profit harder or impossible with older mining machines (depending on the price). Validating that argument is the recent uptick in the mean block interval time, or the average time taken to mine a block.
The mean block interval time rose to 727 seconds or 12 minutes on Wednesday from a low of 8.5 minutes observed on Sunday.
The halving was expected to crowd out some miners, especially the ones using mining devices like Bitmain’s Antminer S9s.
While speaking at Consensus: Distributed on Tuesday, Alex de Vries, founder of financial and economic news portal Digiconomist and blockchain specialist, said, “S9s miners have already lived longer than expected and bitcoin’s price will have to double for these machines to become viable again.”
De Vries also predicted a decline of up to 20% in the hashrate in the short term. So far, the seven-day average has dropped by 6.5%.
However, if prices continue to rise, even the older-generation machines might once more be worth switching on, especially as electricity costs are expected to go down with the arrival of the monsoon season in China’s Sichuan province, a region that contributes over 50% of the total mining power on the Bitcoin network.
But even if prices rise over $13,760, the Antminer S9 would still be operating at a slight loss, according to a calculator provided by .
Some observers believe the miner capitulation happened during the first half of March when the cryptocurrency’s price fell from $9,000 to $3,867. “We already had a mini halving in March due to the price crash. We don’t expect a big drop in the hash rate in the short-term (sic),” on Twitter.