Bitcoin mining has seen a steep decline – almost 40% – over the past 24 hours, with neighboring networks such as Bitcoin Cash and Bitcoin SV, which share the same mining configurations, not seeing corresponding increases.
Bitcoin mining is measured in “hashpower,” or the amount of hashes per second that are dedicated to the blockchain. The more there are in total, the more power is required for a given miner or mining pool to “find” or create new blocks of transactions.
Question: Where Have All The BTC Miners Gone?
Miners play an important and powerful role in the Bitcoin network. They can decide which transactions are included in a block, and ultimately are responsible for enforcing the network’s rules of consensus.
Miners receive a scheduled reward – new BTC entering the system – as well as transaction fees paid by users. The current reward per block is 12.5 BTC, while most blocks pay .5 BTC or less in fees. Combined, this is no small chunk of change, even as the price of Bitcoin has been slipping some this week.
The Bitcoin mining industry is no longer an amateur’s game. To get into the industry, you must invest thousands into equipment, and thousands more into energy costs. You’re never guaranteed a return.
Using trading strategies, some miners can continue through any market, but many are frequently operating on a razor thin margin.
Then, there is the issue of regulation. Potentially, some governments may end up viewing miners as part of a financial network, and therefore subject to similar regulations.
In a decentralized network such as Bitcoin, are you responsible or party to an illegal transaction just because you stored it, or relayed it? Such questions still don’t have a definitive answer around the world.
Needless to say, Bitcoin mining is an industry that takes a lot of effort to get into, and not much impetus to exit.
Answer: Normal Variance, and Perhaps Market Shake-Out
But before we get too deep into this story, there’s an important caveat: there aren’t any 100% reliable methods to estimate the network’s hashrate. It continually varies, based on algorithms, reporting, and node connectivity.
At its very best, any reported number is a “good estimate.”
48 hours ago, Bitcoin’s network was over 100 exahash, which is a number so big you couldn’t fit that many matches inside your house, probably. Late last night, the published figure dropped all the way to 66. In the intervening hours, the number has climbed back to 89, but at press time it still hasn’t recovered to its former level.
The indication, from the outside, is that miners have turned off their hardware.
What the miners did not do, we can similarly learn, is move to other networks. With very few modifications, Bitcoin miners are capable of switching to Bitcoin Cash or Bitcoin SV.
However, if the reason they’ve quit mining is profitability, it appears this large-scale mining outfit doesn’t see itself faring any better on these other chains – although the amount of hash lost is actually more than either of them have in total.