The Chinese market already has access to state-of-the-art mining equipment. Since April, the hash rate of the Bitcoin network has reached all-time highs.
The Bitcoin network’s processing speed (hash rate) has reached all-time highs as Bitcoin’s third halving approaches. However, the Chinese market monopolizes the latest-generation equipment.
During a discussion on mining, Alejandro De La Torre, Vice President of the mining pool Poolin, explained what could happen with mining on the Bitcoin network after the next halving, scheduled for May. De la Torre stated that the community expects the hash rate to decrease. In that sense, he agrees with the opinion of several professionals in the industry, who estimate a drop between 13% and 60%.
De la Torre considers that recent market conditions have been attractive for the mining platforms Antminer S19 series ASIC and Whatsminer M30S. The reduction in mining reward on the Bitcoin Cash and Bitcoin SV networks led many miners to migrate to the Bitcoin network, causing the hash rate to reach all-time highs in early April. However, once the halving occurs, this mining equipment could become obsolete for mining on the Bitcoin network, due to low profitability.
The executive noted that there are also rumors that the Chinese market already has access to next-generation miners. Meanwhile, the North American and European markets do not have access to these new devices at a reasonable price.
Awaiting Drop in Bitcoin’s Hash Rate
The vice president of Poolin estimates that S9-generation miners represent 30% of the Bitcoin network’s hash rate. In this regard, the company Blockware Solutions noted that S9 devices represent 38% of the mining power.
According to said figures, if this generation of miners becomes obsolete after the halving, Bitcoin’s hash rate will inevitably drop quickly. De la Torre stated that a large or small mining farm, which has low electricity costs and operates the newest mining machines, will be fine regardless of how profitability could be affected in the short term. If a miner has high electricity costs and operates old machines, it will undoubtedly have big problems and will have to be disconnected.
Besides, the inability of the North American and European markets to obtain the latest-generation mining equipment leads to the possibility of a considerable decrease in hash rate. Unable to update the equipment, mining on the network will not be profitable for 30% of the miners that constitute the mining power of Bitcoin.
There have been reports on how Bitcoin Cash and Bitcoin SV miners behaved after the halving of both networks affected their profitability. Because of this behavior and the evidence from previous halvings, experts like De la Torre say that the Bitcoin network will have a dramatic hash rate drop after the reduction by half.
In early March, the hash rate of the Bitcoin network fell considerably. That occurred after the sharp drop in the price of BTC in the market, as a result of the coronavirus pandemic.
By Alexander Salazar
