Bitcoin hash rate is tanking!
From the all-time high on halving day, Monday, at 145.9 Eh/s, the bitcoin network’s hash power has crashed over 40% to 87.3 Eth/s, as per Coinwarz.
This means inefficient and overleveraged miners are already shutting down their machines after having their profitability reduced in half.
However, largely the hash rate remains unaffected as we were at this level on March 25th.
The extreme capitulation didn’t come as feared by some. The risk will increase if bitcoin trades sideways now.
Healthy Cleanse of the Network
According to Matt D’Souza, a hedge fund manager and CEO of Blockware Mining, at $8,550 level, 30% of the network is making $0 as their profit margins are shot.
Antminer s9 machine at $0.03 is now making $0 (13.5TH & 1.4kw) the same as Mid Gen (Inno/Canaan) at $0.0393 (30TH & 2.4kw), and Next Gen (s17 NOT+) at $0.07 (50TH & 2.2kw).
But the removal of inefficient miners means an increase in profit margin for those deploying the next generation equipment today.
Moreover, inefficient miners shutting off after margins getting tight resulting in a hash rate drop would lead to difficulty adjustments and pull margins back.
“80% of the network will survive & thrive.”
Miners Capitulation means stronger hands get more coins
Also, in the coming months, new miners with better equipment will be able to benefit from the “cheaper electricity during China flood season,” as noted by Lennix Lai, Director of Financial Markets of OKEx.
When the BTC price rises and margins get rich, miners will come back online and difficulty will adjust itself accordingly.
“After these miners capitulate more coins will get allocated to stronger hands. It creates a far better environment for Bitcoin to rally. This is bullish. It creates less sell pressure on the network as newly minted coins will be accumulated by stronger hands who can shelf away coins,” he said.