How Bitcoin’s third halving, Ethereum 2.0’s launch. Although over two months have passed since the halving happened on the Bitcoin network, the crypto mining industry is still heaving from the frantic pace of events that have followed suit. The rollercoaster of hash rates has left Bitcoin (BTC) and Ether (ETH) prices soaring while provoking mixed feelings among crypto miners.
The COVID-19 pandemic has left its mark on the industry as well, forcing dozens of pools to either switch off or shift their focus from Bitcoin, with its increasing mining difficulty, to less complicated altcoins that are trailing the Big Daddy of crypto.
The impending launch of Ethereum 2.0 is giving food for thought for all miners in their strive to maintain profitability in light of the challenges facing the mining hardware market. After the Bitcoin halving and the onset of the coronavirus pandemic, private miners were left reeling, but large manufacturers were also affected. Will the upcoming Ethereum upgrade aggravate the situation for mining device producers, or is it just another milestone that will be easy to adapt to?
The Bitcoin halving resulted in a serious cleansing in the mining market, with small miners losing all sense of remaining, but the near extinction of private farms was not followed by a significant reduction in major pools.
Alejandro De La Torre, vice president of the Poolin mining pool, stated that 15% to 30% of private miners producing Bitcoin’s hash rate are under immense pressure to remain afloat and are gradually shutting down. A decline of up to 20% in the hash rate is also expected in the short term, with an average daily drop of 6.5%. In total, the hash rate seesawed after the halving from highs of 135 exahashes per second to 98 EH/s, or a 27% decline. But that did not affect interest in the cryptocurrency, as institutions poured into the derivatives market, with Bitcoin options open interest increasing by 1,200% over two weeks.
The Chinese factor in the statistical field cannot be ignored — Chinese pools make up to 65% of all of Bitcoin’s hash rate. The pandemic has had its impact on the local mining industry, forcing more than 40 production facilities to stop deliveries. The delays have had a major effect on all miners, as older versions of mining rigs could not be replaced with newer equipment that could have increased the hash rate and compensated for the halved reward and increased difficulty requirements.
The drop in the price of Bitcoin in May from $10,500 to $8,100 saw the shutting down of almost 2.3 million Antminer S9 mining rigs, which is clearly reflected in the drop in hash rates from China, where most old mining equipment became unprofitable and was sold for scrap.