Advancing mining efficiency in light of Bitcoin’s diminishing returns

Quick Take

As Bitcoin (BTC) approaches its next halving event in April 2024, a unique pattern of progress marked by diminishing returns is becoming apparent. The hash rate, a critical measure of miners’ performance, is currently soaring above 400 Eh/s, maintaining a robust growth momentum. Yet, each successive Bitcoin halving event reveals a nuanced story: progress, though steady, doesn’t mirror the surges seen in the early halving stages.

In the wake of Bitcoin’s first halving, the hash rate growth skyrocketed by an astounding 1,364,787,820%. The second halving, while still impressive, saw a significant reduction to 5,448,118%. The third halving further moderated the growth pace to 8,520%. Currently, the fourth halving projects an approximate growth of 250%.

Notably, these figures do not denote a regression but a transition to a more sustainable growth rate. Each halving incrementally reduces the Bitcoin block reward, intensifying the mining competition. This competitive pressure, while challenging, forces the industry towards efficiency and evolution. Consequently, the landscape is likely to favor the survival of the most advanced and efficient mining companies.

Hash Rate Growth: (Source: Glassnode)

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