Bitcoin Halving Triggers Mining Machine Shutdown Wave! Global Hashrate Plummets, Miner Income Shrinks

In a research report on Wednesday (May 15), BTIG stated that the latest Bitcoin halving has reduced the block reward from 6.25 BTC to 3.125 BTC, causing less efficient mining equipment to go offline as miner income dropped to a level equivalent to a Bitcoin price of around $30,000.

BTIG noted that transaction fees spiked to about $128 immediately after the halving, then stabilized in the range of $3 to $4. The price of Bitcoin remained relatively stable post-halving, averaging around $63,000, reflecting a 45% increase since the beginning of the year.

Despite this, global hashrate fell by about 6%, from an average of 624 EH in April to 585 EH in the first two weeks of May. This decline is expected to range between 5% and 10%, as mining equipment with efficiency below 35 J/TH is disconnected.

If Bitcoin's price drops further, the hashrate might see a more significant decline. The report stated that the cash breakeven point for most publicly traded mining companies ranges from $20,000 to $40,000 per Bitcoin.

Earlier this year, several US-listed miners reduced their Bitcoin sales used for funding operations, opting to use stock for growth instead.

"Many miners built up Bitcoin inventories before the halving," BTIG noted, adding that Riot Platforms, Cleanspark, and Cipher Mining sold only a small portion of their Q1 2024 production, far less than the 80%-90% average level in 2023. In contrast, Core Scientific Inc and Bitdeer Technologies Group continued to sell most of their Bitcoin to fund operating expenses.

The three largest Bitcoin ETFs, accounting for about 85% of ETF assets under management (AUM), increased their share holdings by 38% between mid-January and mid-March, during which Bitcoin prices peaked at $73,000.

Since then, although Bitcoin's price has fallen by about 14%, these ETFs' share holdings have only increased by 1%. BTIG analysts explained, "While ETF inflows seemed to support Bitcoin prices earlier this year, the halving is more significant."

Global hashrate is expected to continue declining through the summer, potentially bottoming out in August due to high electricity prices in Texas, expected to average $140/MWh during the summer.

"We anticipate global hashrate will remain under pressure, most likely bottoming out in August," BTIG's CFA stated. Looking ahead to 2025, electricity prices are expected to stabilize around $55/MWh, possibly rising again next summer.

Large-scale mergers and acquisitions in the Bitcoin mining industry may not occur immediately, but smaller acquisitions are expected. Cleanspark recently acquired 75 MW of power at $250,000/MWh, setting a precedent for other miners to pursue similar-scale acquisitions.

BTIG's report concluded, "The market remains polarized, with companies able to secure funding expected to grow, while those less fortunate may have to sell due to reduced income post-halving."