Following the recent halving of the Bitcoin network, about 30% of miners have quit. They decided to shut down after BTC mining proved unprofitable due to the halving of the block rewards to 6.25 BTC.
Alejandro De La Torre, who is the VP of Poolin, one of the biggest crypto mining pools in the world, made the revelation via a medium post. In the post, he noted that small miners who account for 15% to 30% of the BTC hash rate were in the process of quitting due to the halving, which has lowered profit margins extensively.
He noted that those who are most likely to be affected are those operating old and inefficient mining rigs such as the S9 miner, developed by Bitmain. De La Torre said that Poolin expected the first 1008 blocks to be mined slowly after the halving events as unprofitable miners leave the network. The reason for this is that these 1008 blocks will have the same difficulty as before the halving and half the block reward.
A Spike in BTC Prices Could Even Things Out
Some crypto experts opine that the sharp drop in revenues could be remedied by a surge in BTC prices. They point to past halving events, where the price of BTC tends to shoot a short while after the halving.
In his medium post, De La Torre said that companies involved in Bitcoin mining should have the long game in mind. He said that companies, which had not upgraded to more efficient mining rigs or found cheaper sources of power, would be forced to capitulate. He added that while most inefficient miners would be forced out, some would survive for now due to access to cheap power.
The BTC Halving
About every four years, the BTC mining reward drops by half. Satoshi Nakamoto hardcoded the feature into the Bitcoin blockchain and it is meant to avoid the blight of inflation that plagues fiat currencies. In 2009, the block reward was 50; it fell to 25 in 2012 and 12.5 in 2016. On May 11, 2020, the block reward fell to 6.25 BTC.