- Bitcoin halving already made an impact on the coin's own mining industry, it is not the most positive one.
- Due to some BTC miners leaving post-halving, the hashrate dropped.
- As a result, miners took longer to solve blocks and received fewer rewards.
This year brought a lot that the world needed to handle, including the third halving of the world’s largest cryptocurrency, Bitcoin. In fact, Bitcoin (BTC) halving was one of the most highly anticipated, as well as the most concerning pending events for months, now.
People wanted it to happen because the halving usually means that the coin’s price will experience huge growth like it did in the past. However, it also means that its block rewards are getting cut in half, which means that miners will have to deal with the same large costs of mining, but reduced rewards.
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Of course, the surging price promises to cover the expenses, but that means little when no one can tell when, or even if the price is going to grow. With even the growth itself being under a huge question mark, speculating about the potential price seems rather pointless.
Meanwhile, the miners had to figure out a way to make Bitcoin mining worthwhile, which is why they had to start relying on transaction fees in order to sustain themselves.
Why did the miners’ earnings drop?
According to this month’s data, miners earned 2188 Bitcoin coins on May 10th, one day before the halving. However, as soon as the halving took place, the very next day — May 12th, that number dropped to 852. In other words, the number of mined coins experienced a drop of 61%.
Of course, the explanation for this is rather clear. The halving caused some miners to leave the chain, which led to a drop in the remaining miners’ mining power, or hashrate. While the block difficulty still did not drop to match the hash rate, the time needed to mine blocks got increased, and fewer blocks were processed. As a result, fewer Bitcoins got released into circulation, meaning that the miners received reduced rewards.
This series of events can easily be named a death spiral, even though it is a minor one. The only thing that saved the network by providing an alternative to the miners is the fact that they could turn to transaction fees, which surged from $0.62 a month ago, to $5.21 right now.
Due to the change, transaction fees now represent 17% of the revenue earned by the miners.