Galaxy Digital Research Forecasts Bitcoin Hash Rate Shake-Up Ahead of Halving

As ASIC models brace for Bitcoin's halving, analysts predict mining machine exodus and strategic shifts.

Galaxy Digital unveiled new research suggesting that a significant portion of Bitcoin's current hash rate – up to 20% - could vanish.

Galaxy's mining analysts highlight that by the conclusion of 2023, over 70% of Bitcoin's hash rate was being generated by just eight ASIC miner models. These models, as outlined in the report, are sensitive to fluctuations in Bitcoin price and transaction fees. Consequently, post-halving, between 15% to 20% of the hash rate produced by these ASIC models could vanish. This reduction is poised to impact specific ASIC mining machine models, potentially causing a decline in the network's overall hash rate.

The projections indicate that older and less efficient models, such as Bitmain’s S9, Canaan’s A1066, and MicroBT’s M32, may face near-complete shutdowns in a less severe scenario. Conversely, newer and highly efficient models, like the Antminer S19 and S19J Pro, along with Canaan’s A1246, are anticipated to endure the halving's effects. However, certain models may still experience offline periods in regions with higher operational costs.

Galaxy’s analysts outline potential outcomes influenced by business decisions. Some miners may opt for custom firmware to enhance efficiency, while others might sell to miners with lower electricity costs. Additionally, miners employing newer S19 models could face challenges, possibly leading to sales or upgrades.

The next Bitcoin halving, expected to take place around April 20 at block number 840,000, will slash block rewards from 6.25 to 3.125. These forecasts take into account reduced block rewards, 15% transaction fees, and a Bitcoin price of $45,000, compared to the current $52,000. Future power costs and public miners' expenses were also factored in.

Despite the impending challenges, the anticipation of the halving has sparked substantial investments in mining infrastructure. Companies such as Riot Platforms and Bitfarms have bolstered their mining capabilities through sizable equipment purchases, banking on a resurgence in the cryptocurrency market. Riot Platforms, for instance, made a significant investment in December, acquiring 66,560 MicroBT machines for $290.5 million, with an option to purchase up to 265,000 more MicroBT miners. Meanwhile, Bitfarms has announced plans to augment its mining fleet with 36,000 Bitmain T21 miners, aiming to enhance efficiency, reduce production costs, and expand hash rate capacity.