Bitcoin (BTC) Final Difficulty Adjustment Before Halving Raises Concerns On Miner’s Survival


Bitcoin BTC Implied Volatility
Image Courtesy of Piqsels

Bitcoin (BTC) Final Difficulty Adjustment Before Halving Raises Concerns On Miner’s Survival

Bitcoin (BTC) difficulty set its second-largest difficulty level ever on Tuesday, May, 5 as miners hold in line for the block reward halving expected in the coming week. As one of the most anticipated events of the year approaches, qualms that small miners may shut down following the halving are supported with the soaring difficulty rates.

BTC difficulty sets sights on ATH

Bitcoin’s difficulty adjusts every 2016 blocks balancing the competition for block rewards to ensure only about 144 blocks are mined each day. The difficulty adjustment soared towards all-time highs setting its second-highest difficulty at 16.1048 T since crossing the 16.5556 T mark on March 25th 2020.

1-year BTC difficulty adjustments (Image: Coinwarz)

Shortly after hitting its ATH, the difficulty dropped by 16% in its next adjustment and has since been gradually rising to current levels.

The difficulty adjusts higher or lower depending on how miners performed the previous week.  The 0.92% adjustment spike in the difficulty follows last week’s abnormal rise hash rates that saw 16 blocks mined in an hour.

A bleak future for small miners

The mining hash rates – a measure of the energy required to mined Bitcoin blocks –set all-time highs in the past week, setting the current adjustment upwards. However, this paints a bleak future for small miners with the halving, whereby the block rewards will drop from 12.5 BTC to 6.25 BTC.

According to crypto analyst, Mati Greenspan, the hash rate will plunge following the halving given the current prices of BTC are not sufficient to be profitable for the current older generation ASIC miners.

John Todaro, head of research at TradeBlock,  estimates the break-even price for BTC for miners to remain profitable will shoot up from ~7,000 USD (current levels) to $12,000 – $15,000 post halving.

With the old generation machines expected to go out of service and small miners capitulating post-halving, the hash rate will subsequently fall. On the reaction post-halving Mati said,

“The hash rate will probably come down quite a bit and two weeks later, the difficulty will be adjusted lower.”

Can BTC’s price rise above the current $9,000 level and set a profitable level for the miners post halving?

Author: Lujan Odera
Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.
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Lujan Odera 385 Articles
Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.
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