Once unprofitable BTC miners are turning their machines back on — Analyst

Bitcoin miners have likely put their older crypto-mining machines back to work in the first quarter, contributing to a record-setting hash rate as Bitcoin’s price skyrocketed to a new all-time high in early March.

“Improved market conditions have encouraged miners who were previously unprofitable at lower hashprice levels to come back online,” said Nico Smid, founder of Digital Mining Solutions in the firm’s first quarter Bitcoin mining review, published on April 2.

Bitcoin’s hash price level has moved in a similar trajectory to Bitcoin’s (BTC) change in price, which has increased 56.8% in 2024 to $66,280 at the time of publication.

Switching back on these older Bitcoin miners may have contributed to a 14.7% increase in Bitcoin hash rate since the start of 2024.

“This growth is equivalent to adding 375,000 Antminers S21 200 TH/s to the network.”

The deployment of Bitmain S21s and other latest-generation mining equipment also played a role in driving Bitcoin hash rate growth over the first three months.

Source: Nico Smid

Bitcoin’s hash rate peaked at 631 exahashes per second (EH/s) on a 7-day moving average on March 11 — a little less than a week after Bitcoin surpassed its previous all-time high price of $68,990.

Bitcoin’s change in hash rate in 2024. Source: Digital Mining Solutions

Bitcoin went on to set a new all-time high of $73,738 three days later on March 14, according to CoinGecko.

Related: Bitcoin miner bankruptcies will be less common this cycle — Hut8 CEO

Interestingly, Smid noted miner revenues reached a new all-time high on March 10 despite a steady decline in transaction fees since the start of March.

“While this is beneficial for individuals seeking to send quick transactions, it presents a less favorable scenario for miners who have grown accustomed to high transaction fees over the past few months.”

Change in total transaction fees on Bitcoin in 2024. Source: Digital Mining Solutions

While old miners are turning back on, the cost of application-specific integrated circuit (ASIC) machines continues to stabilize as many Bitcoin miners are holding off on new investments as the halving event fast approaches.

“Miners seem to be adopting a ‘wait and see’ approach as the halving event approaches,” noted Smid, who cited an ASIC Jungle survey which found 65% of customers are postponing the purchase of new miners until after the halving.

The Bitcoin halving is currently slated for April 20 when block 840,000 is reached. The event will reduce miner rewards from 6.25 BTC ($414,000) to 3.125 BTC ($212,000) at current prices.

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