The recent Bitcoin halving event, which saw the block reward slashed from 6.25 BTC to 3.125 BTC, has prompted the shutdown of less efficient mining rigs as miner revenues plummeted, according to a research report by BTIG released on Wednesday.
Transaction fees, initially surging to approximately $128 following the halving, have since settled back to the $3-$4 range. Meanwhile, Bitcoin prices have maintained relative stability post-halving, averaging around $63,000, marking a notable 45% increase year-to-date, as highlighted by BTIG.
Despite the resilient Bitcoin price, global hash rates have witnessed a decline of approximately 6% from April’s average of 624 EH to 585 EH in the first half of May. This anticipated dip, ranging between 5% to 10%, has been attributed to the disconnection of less efficient mining rigs, particularly those with efficiencies exceeding 35 J/TH.
Further deterioration in hash rates could materialize if Bitcoin prices experience a downturn, with most public miners operating at cash breakevens ranging between $20,000 to $40,000 per Bitcoin, according to the report.
Earlier this year, several U.S.-listed miners opted to reduce Bitcoin sales used for operational funding, instead resorting to equity financing for expansion initiatives.
“Many miners amassed BTC inventories in anticipation of the halving,” BTIG noted, citing instances where Riot Platforms (NASDAQ:RIOT), Cleanspark (NASDAQ:CLSK), and Cipher Mining (NASDAQ:CIFR) sold only a fraction of their Q1 2024 production, significantly below the 80-90% average witnessed in 2023. In contrast, Core Scientific Inc (NASDAQ:CORZ) and Bitdeer Technologies Group (NASDAQ:BTDR) continued to liquidate the majority of their Bitcoin to cover operating expenses.
Despite a surge in Bitcoin prices earlier this year, the three largest Bitcoin ETFs experienced a modest 38% increase in outstanding shares from mid-January to mid-March, suggesting a shift in market dynamics following the halving event.
Looking ahead, BTIG anticipates a continued downward trajectory in global hash rates, potentially bottoming out in August, attributed in part to elevated power prices in Texas, projected to average $140/MWh during the summer months.
“While large-scale mergers and acquisitions in the Bitcoin mining sector may not be immediate, smaller-scale acquisitions are anticipated,” BTIG speculated, citing Cleanspark’s recent acquisition of 75 MW at $250,000/MW as a potential precursor for similar strategic moves among industry players.
In conclusion, the report underscores a divergence in the market, with companies possessing ample capital poised for expansion, while others face pressure to offload assets due to reduced post-halving revenues.
