What changes have occurred in Bitcoin's hash rate and among miners after the halving? Let's hear what the experts have to say.

Before the Bitcoin halving, the hash rate was stable and steadily increasing, reaching unprecedented levels of mining enthusiasm. According to data from BitinfoCharts, the Bitcoin hash rate even hit a historical high the day before the halving, sparking curiosity among industry professionals and investors about how Bitcoin miners will react once the block reward is reduced from 12.5 to 6.25.

Changes in Mining Power After Halving

According to statistics released by Larry Cermak, research director at The Block, the average time for the production of three Bitcoin blocks after the halving was less than 7 minutes. Generally, the Bitcoin block production time should be around 10 minutes. If the average block production time remains consistently below 10 minutes, it indicates an increase in Bitcoin's mining power and miner participation.

Something really interesting is happening. It's still really early (and fairly a small sample size) but the interblock time is actually decreasing meaning that blocks are being mined faster than prior to the halving. The 3–block average is now less than 7 minutes. pic.twitter.com/Q1wwsp88qd

— Larry Cermak 🫡 (@lawmaster) May 12, 2020

However, this situation did not last long. A day later, Bitcoin miners seemed to take action. The average block production time after the halving now exceeds 10.5 minutes. Larry Cermak estimated that the current mining power has decreased by about 10-15% compared to pre-halving, and the next mining difficulty adjustment is expected to decrease by about 2%.

On the other hand, Matt D'Souza, CEO of Blockware Solutions, pointed out that people are looking at inaccurate mining power and difficulty calculators, rather than the individual mining pool's changes in mining power.

How inefficient is our Market? Everyone is following inaccurate Difficulty Calculators rather than the Hash of the Pools (hard data). Not realizing the major drop off in Hash Rate -12%. Shut offs already have begun. .@PrestonPysh @100trillionUSD @BITVOLT7 @krugermacro @caprioleio pic.twitter.com/IbEF5n56nv

— Matt D'Souza, CPA (@mjdsouza2) May 12, 2020

Matt D'Souza further stated:

"If the Bitcoin price continues to stay at this level or lower, this is the beginning of shutdowns (referring to small miners or old mining machines shutting down). After income has decreased by 50%, these surrendering miners will provide some much-needed short-term profit relief for surviving miners. However, if the Bitcoin price rebounds, then shutdowns may not be necessary."

Largest Bitcoin Mining Pool Speaks Out

Regarding the changes in Bitcoin's mining power, the largest mining pool in the Bitcoin ecosystem, f2pool, also released a series of tweets today expressing its observations.

It's been almost 24 hrs since @satofishi metaphorically etched #F2Pool's message onto #Bitcoin block 629999 & the network hashrate has been volatile since ⛏

From our analysis of mining pool hashrate, network hashrate has dropped from ~120 EH/s to ~100 EH/s over the past week. pic.twitter.com/IMreGrXlNk

— f2pool 🐟 (@f2pool_official) May 12, 2020

f2pool pointed out that compared to pre-halving, Bitcoin's mining power has decreased from 120 EH/s to around 100 EH/s, a decrease of about 16%. Currently, the average earnings for miners at 1 TH/s (mining power unit, meaning 1 trillion Hashes per second) have fallen below the levels seen during the Bitcoin price crash on March 12.

However, f2pool emphasized that although profit margins have significantly decreased, new ASIC mining machines still have profitability. In addition, while old ASIC mining machines have lost their profitability, these miners have not given up. f2pool stated that many miners have already relocated their equipment to areas with lower electricity costs to cope with this halving.

Will Mining Difficulty Occur?

The "mining difficulty debate" that was ongoing before the halving still holds significant discussion post-halving. However, based on the information provided by f2pool, miners have not just sat back and waited for the block rewards to halve; they were prepared for the halving. Moreover, Bitcoin mining can achieve a dynamic balance where surrendering miners leave, and surviving miners can earn higher profits, which can be seen as a redistribution of mining power among miners without spiraling into a death spiral. On the other hand, even if Bitcoin's current mining power drops by 60%, it would only return to the levels seen in January 2019, which does not pose a serious security risk to the Bitcoin system but rather a relative decrease in security.

We remain cautious about the "mining difficulty debate," but investors still need to monitor the extent of changes in Bitcoin's mining power to address any potential systemic risks or delayed supply issues caused by miner sell-offs.

Related Reading

• Breaking Shutdown Price = Mining Difficulty? These Misunderstood Mining Insights You Need to Know
• Analysis of Binance Mining Pool, Mining Leader F2Pool: Engaging in Price Wars that Will Disrupt the Overall Mining Industry

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