Bitcoin
Bitcoin (BTC) hash rate may finally slow down as miners face scorching summer heat wave
Bitcoin’s Relentless Growth (BTC) The hashrate, or computing power of the network, may finally slow down, giving miners some relief as extreme summer heat waves force some operations to scale back.
Miners saw their profit margins reduced in an already overcrowded sector after the halving reduced their mining rewards by 50%, while hashrate continued to reach new highs. Among the main reasons for the hashrate growth: previously acquired mining rigs are online and miners have been scrambling to upgrade their fleet with more efficient rigs to remain profitable after the halving. On May 25, for example, the hashrate rose to a record 658 exahash per second (EH/s), according to data from the Luxor Hashrate Index.
However, this relentless growth is expected to slow in the coming months as North America enters summer with associated heat waves. Miners use extremely powerful machines that emit a lot of heat as a result of their calculations. “The number one operational challenge for Bitcoin miners is heat mitigation,” said analysts at Blockware Intelligence. “ASICs are large, powerful computers that can reach very high temperatures without adequate cooling measures.”
Mitigating this heat becomes an even greater problem during the summer, as companies need more energy to cool their machines and/or shut down operations due to the high demand from energy consumers who turn on their air conditioning. “Many miners have to reduce operations [during summer months] partly due to overheating, but also due to residential energy consumption reaching levels high enough to trigger demand response clauses in mining companies’ power purchase contracts,” Blockware added.
This seasonal phenomenon has resulted in a lower hashrate over the past two summers and the lower hashrate means a decline in the difficulty of mining a bitcoin block. “As we enter the summer months in the United States, we are eager to see if hot weather will force miners to scale back and thus suppress hashrate growth like we saw in 2022 and 2023,” according to a report from 17 June from Colin Harper, head of content and research at Luxor Hashrate Index.
In fact, the hashrate has already started to fall since reaching an all-time high in March. On June 17, it fell 10% to 589 EH/s, according to data from the Hashrate Index. Since most miners are located in the US, especially in hot Texas, companies in North America ceasing operations will likely affect hashrate growth. “According to data from the University of Cambridge, around 37% of all Bitcoin mining occurs in the United States,” said Blockware. “As the summer continues to heat up, it is reasonable to expect US-based miners to have heat-induced restrictions.”
Lower hashrate and difficulty could be a positive outcome for some miners as competition wanes in the summer. Additionally, some miners, such as Riot Platforms (RIOT), will be able to earn additional income from the power grid by scaling back their operations as part of their power purchase agreements.
Luxor Harper: “If the hashrate continues to fall, then miners may be presented with a negative outcome [difficulty] tune this week – here’s to hope!”