Galaxy Digital analysts predicted a potential 20% decline in the network hash rate as the Bitcoin halving approaches in April.
Analysts predict that this halving will impact eight specific miner models, reducing the network’s hash rate.
Halving will reduce mining rewards per block from 6.25 Bitcoins to 3.125 Bitcoins, encouraging miners to seek increased efficiency and lower costs to mitigate the impact of lower rewards. The current hash rate is approximately 515 exahashes per second (EH/s).
The affected models were identified in a report published on Wednesday.
This prediction is based on an analysis that takes into account new block subsidies, transaction fees of 15% of rewards, Bitcoin (BTC) price of $45,000, and current price of around $52,000.
The analysis also took into account future electricity prices and the costs of public mining companies. The difference in hashrate is due to the breakeven sensitivity of these ASIC models to fluctuations in the Bitcoin price and transaction fee rates.
According to the report, miners using older, less efficient machines can use custom firmware to increase ASIC efficiency or sell the equipment to miners with lower power costs.
Compass Point Research & Trading, via senior analyst Chase White, expects the hash rate to decline slightly from an expected 565 EH/s in April to an average of 500 EH/s in May, taking into account an average Bitcoin price of $55,000 before the halving. It is expected to rise to $57,500 thereafter.
Expectations of the halving and market rebound in the second half of 2023 have driven significant investments in mining infrastructure, with companies such as Riot Platforms and Bitfarms expanding their mining capabilities through significant purchases of mining equipment.
“I think miners with low or no debt, bottom quartile power costs, and efficient mining equipment will be fine,” White said. “But I expect there will be pain for everyone, especially in the beginning, as less profitable miners try to wait out each other before shutting down.”