Bitcoin halving one week ago: The hash rate of the entire network fell below 100EH/s, and the mining industry as a whole is facing survival pressure

At 3:23 am Beijing time on May 12, Bitcoin completed its third halving at block height 630,000, and the once-in-four-year industry "festival" came to an end.

The price of Bitcoin after the halving did not see the expected surge, but the total network computing power of Bitcoin has dropped significantly. According to OKLink blockchain browser data, as of 14:30 Beijing time on May 19, the total network computing power of Bitcoin was 99.88 EH/s, a decrease of 17.21% compared with the average computing power of 120.64 EH/s on May 12, the day of the halving.

Image source: OKLink

One week after the halving, most of the on-chain data showed a downward trend

Not only the total network computing power, but also various chain data in the week after the halving also showed a downward trend. According to statistics, from May 11 to May 17, Beijing time, the number of active addresses on the BTC chain totaled 4,823,767, down 4.8% from last week; the total transaction volume on the BTC chain was 4,233,617.09, down 6.8% from last week; the total number of transactions on the chain was 2,060,605, down 8.55% from last week. All the data show a phenomenon: the activity on the BTC chain has declined .

The fundamental reason for the decline in activity on the BTC chain is the decline in computing power across the entire network.

After the halving, the block reward that directly affects the miners' income dropped by 50%, and more than 40 types of mining machines will lose money if they are turned on. In the absence of cheap electricity during the flood season to reduce losses, most miners chose to shut down. Most of the shut-down machines are Antminer S9, which was once the king of mining machines. The computing power of Antminer S9 accounts for about 70% of the total computing power of the entire network. Since it was launched in 2016, it has always been a representative model with high cost performance. As of May 18, Beijing time, the daily income of S9 is not negative only when the electricity price is lower than 0.22 yuan per kilowatt-hour.

Image source: F2Pool

This is just a theoretical profit estimate. In addition to electricity costs and the ever-changing coin prices, miners also need to bear other costs such as mine maintenance. Even for the Antminer S19 Pro, which currently has the best energy efficiency, electricity costs account for as much as 29% under the same conditions.

The miners' income is decreasing at a visible rate, and the pressure is obvious. As the most direct data of miners' emotions, the computing power of the entire network has also shown a significant decline. With the decline of the computing power of the entire network, the interval between blocks in the Bitcoin network has also been significantly extended since the halving day.

Image source: OKLink

The longer interval between block times has slowed down the speed of on-chain transactions, which is directly reflected in the decline of the number of transactions and transaction volume. All these have led to a significant increase in the number of unconfirmed transactions and serious network congestion after the Bitcoin production cut. As of May 19th, Beijing time, the 24-hour TPS (transaction rate) of the Bitcoin network was 3.37 transactions per second, a significant decrease from the daily level of 5 transactions per second (the theoretical maximum value of TPS is about 7 transactions per second).

The network is congested, and the transaction fees for packaging transactions have risen. At present, when the block reward is halved, the transaction fees make up for part of the losses of miners.

After the halving, the mining industry is facing a difficult road to survival

The transaction fees caused by the current network congestion can make up for the losses of miners caused by the halving to a certain extent, but this only solves the current problem to a small extent. After the halving, whether it is mining machine manufacturers, mining farms, mining pools or miners, the entire mining industry is facing certain pressure.

After the block reward is halved, the computing power required to mine the same amount of Bitcoin before the halving is higher. Mining machines with low computing power and high energy consumption ratio will be directly eliminated, which directly increases the pressure on a number of mining machine manufacturers. Bitmain, the largest mining machine manufacturer, even laid off a large number of employees at the end of 2019 to cope with the impact of the halving.

The accelerated iteration speed of mining machines has forced mining machine manufacturers to continuously improve their R&D and sales capabilities, and has also kicked off a new round of market competition among mining machine manufacturers. At present, Bitmain is deeply involved in the dispute between the founders over the company's sovereignty. After Canaan Creative went public, it announced its entry into the AI ​​industry. After the founder of Shenma Mining Machine was involved in a legal dispute, it maintained its usual low profile. From time to time, traditional large manufacturers such as Nvidia have reported on their entry into the mining machine industry, and the emergence of a number of small-brand mining machines has made the mining machine market full of unknowns.

The mining farms are not doing well after the halving. The sluggish environment has made it more difficult to operate and maintain the mining farms. After the halving, the revenue has dropped, and if the vacant machines cannot be replaced in time, there will be losses every day. Like the mining farms, the mining pools that serve the miners are also under considerable pressure. A large number of machines have been shut down, and the total computing power is decreasing. However, with the continued existence of old mining pools and the continuous addition of exchange-based mining pools, the increasingly low handling fees are squeezing the profit margins of mining pools, and the challenges in the mining pool industry are constantly increasing.

The mysterious mining pool Lubian has recently emerged, which has caused a lot of discussion. The outside world speculates that this is a self-built mining pool formed by several large mines and large miners to take self-help measures. After all, building a mining pool by yourself can save a lot of mining pool fees. From this point, it can be seen that even if large miners and small and medium-sized miners are anxious, the ability of large miners to survive the winter is obviously stronger.

Image source: OKLink

In addition to building their own mining pools, large miners often have more advantages in terms of electricity prices. The financial advantages and scale operation advantages of large miners will gradually become prominent after this halving, affecting the entire mining layout. It is understood that the electricity price during the flood season this year is between 0.2-0.24 yuan per kilowatt-hour, which is generally low. The flood season will officially begin in 6 days. If the electricity price can be 0.2 yuan per kilowatt-hour, the S9 can continue to be turned on for a while. Combined with the upcoming new round of difficulty reduction on May 20, if the coin price stabilizes at around 10,000 yuan, the computing power of the entire network may usher in another round of callbacks.

The mining industry after the halving can perhaps be described as “the worst era, but also the best era”. After the darkest moment, will the industry continue to be depressed or usher in new growth? We will have to wait and see.