Bitcoin Miners Are Shutting Off their Rigs as Hash Rate Drops 28% from ATH
- Trading volume hit new highs on sell-off
- Bitcoin hash rate down 28% from ATH on March 1st at 136.2 Th/s to below 100 Th/s
- Bitcoin mining difficulty preparing for a negative 6.5% to 9.1% change
- Mining profitability falls to its all-time low of 0.077
The price of Bitcoin is keeping stable at around $5,000, currently trading at $5,325 with 24 hours gains of 5.79%. In the past 24 hours, $1.75 billion worth of bitcoin exchanged hands.
The trading volume of the digital currency reached near record highs amidst the deep sell-off last week. On March 12th, bitcoin trading volume soared to a two year high with more than 416,000 BTC changing hands.
The high beat the second-highest day occurred on November 20, 2019, when bitcoin just like the past week, experienced a sudden, deep sell-off.
Hash Rate Drops
The bitcoin price went down to as low as $3,850, last recorded in March 2019. The hash rate of the network at that time didn't falter but finally, the effects could be seen on the hash rate — the computation power to mine BTC. Bitcoin mining pool F2Pool said,
The network hashrate has dropped from a peak of ~124 EH/s to ~102 EH/s, while the bitcoin price has dropped from $9000 to $4800.
There is always a time lag for hashrate to decrease due to hosting contracts, and time required for operators to turn off a large number of machines.
— f2pool (@f2pool_official) March 16, 2020
The hash rate of the network is currently down over 28% from the all-time high on March 1st at 136.2 Th/s to back below 100 Th/s, as per data analytics firm Blockchain.com.
Worth monitoring Bitcoin's hash rate as we approach halving and spot has retraced 40% this month. Back < 100 Ehash/s
— skew (@skewdotcom) March 17, 2020
Bitcoin miners, particularly in China have started to feel the brunt of the BTC price crash. According to data from F2Pool, a majority of the mining pools have recorded a drop in hash rate. F2Pool tweeted on March 12,
Miners, take care of yourselves 😳
— f2pool (@f2pool_official) March 12, 2020
Crypto exchange Huobi’s mining pool experienced a drop of 26% over the past week with 1THash close behind with a loss of 20%. Meanwhile, the bigger pools like Pooling, F2Pool, and Btc.com saw a decline of only 18%, 12%, and 10%.
The bitcoin mining difficulty that has been surging in line with the hash rate and has yet to see a decline is preparing for a negative 6.5% to 9.1% change in the difficulty in the next 8 days. F2Pool said,
However, we saw over the weekend the estimated difficulty change is trending downwards…https://t.co/ppng1u3EKT
This means some miners are now switching off their machines. As always in mining it's the survival of the fittest:
New Machines. Cheap Electricity. Low Rent 🚀 pic.twitter.com/ryj3H8Gv9z
— f2pool (@f2pool_official) March 16, 2020
Bitcoin mining profitability at a record low
Bitcoin mining profitability has already taken a hit. Less than two months away from reward halving, mining profitability has fallen to its all-time low of 0.077.
Miners' average revenues have fallen sharply this week.
The last time revenues were at this level was in May'19, with difficulty less than half of current rate. Difficulty level reflects the amount of hash power allocated to #bitcoin and is a proxy for operating costs. pic.twitter.com/tlcQkE4yLx
— James Bennett (@jamesonthechain) March 16, 2020
With revenues gone flat and a 100% increase in costs, miners will feel the pinch right now which would result in an increase in block times and fees as “transactions compete for space in the chain,” said James Bennett, CEO of crypto data analysis firm ByteTree.
Difficulty on a lot of gpu coins is coming down already. Still mining profitably, but I have cheap electricity as well.
— MeanHash⛏️🤖⛏️ (@MeanHash) March 16, 2020
At this point, even the most efficient mining equipment like Bitmain’s AntMiner S17 Pro and WhatsMiner M20S of MicroBT are generating daily profits at a gross margin below 50%.
Now, come halving which will reduce miner revenue by half, if the price of bitcoin doesn't bounce back higher, miners will capitulate. Christopher Bendiksen, Head of Research at Coin Shares said,
Mining revenue is now half of June 2019 and a third of January 2018. Death spiral incoming any minute now.
— Christopher Bendiksen (@C_Bendiksen) March 12, 2020