Bitcoin Difficulty Sinks as Miners Mull Post-Halving Perks

• Bitcoin mining difficulty sees a significant percentage fall.
• This suggests a consequential number of miners are leaving the network.
• Runes and Ordinals activity has flatlined.

The highly anticipated Bitcoin halving on April 19 ushered in a new era of scarcity for the network. By reducing the block reward from 6.25 to 3.125 BTC, the event made an already ruthlessly competitive mining landscape even more unforgiving.

Sponsored

Miners were braced for tougher economics post-halving, but few could have predicted the current landscape. Three weeks out from the halving, evidence of miner capitulation has emerged as mining difficulty takes a significant dip.

Bitcoin Miners Under Pressure

Bitcoin mining difficulty fell by a significant 6% on May 10, dropping from 88.1 trillion hashes to 83.15 trillion hashes, per data from CoinWarz . This marked the largest percentage difficulty reduction since July 2021 when it plunged 28% to 14.36 trillion hashes. The mining difficulty metric automatically adjusts to account for changes in the total computing power of the BTC network.

Bitcoin mining difficulty per CoinWarz

Bitcoin miners earn revenue from block rewards and transaction fees. After matching the target hash and successfully mining a new block, the miner receives the block reward in newly released BTC along with all fees paid by users to have their transactions included.

With the halving cutting block rewards from 6.25 to 3.125 BTC, many assumed that increased transaction fees from Ordinals and the new Runes protocol would help offset the hit to block rewards. But that dynamic has yet to play out as daily mining revenue plummeted post-halving.

Read More

Robinhood Sees Massive Dogecoin Outflows After Wells Notice

Lawyer Predicts Ripple Win in SEC Case: Good News Looming?

Cartier Heir Caught Laundering Crypto In 100KG Cocaine Bust

Mining Revenue Down

The run-up to the halving saw daily mining revenue spike as high as $107.8 million, but the post-halving period has seen a sharp drop in revenue, sinking to $29.9 million as of May 9 to record a 29-week low, according to data from YCharts .

Bitcoin daily mining revenue per YCharts

The severe drop in revenue underscored the squeeze on profitability that miners are facing in the aftermath of the halving event. Meanwhile, both Ordinals and Runes are currently failing to live up to the hype, subsequently adding to miners’ woes.

Are Bitcoin Runes a Flop?

The Runes protocol, which was created to bring meme coins to the base layer, was touted as the miners’ savior post-halving, as the expected surge in activity would drive up transaction fees. Yet shortly after their launch, on halving day, Dotta, the CEO of Forgotten Runes, conceded that the response had been lukewarm as the leading project “Satoshi Nakamoto” had less than 20,000 holders.

The response to Runes has been respectable but … tepid?

The fewer than 20k holders for the top and #3 less than half that

What do you think:

A flop or the buying opportunity of a lifetime? pic.twitter.com/tpOGAy6xxs

— dotta (@dotta) April 21, 2024

Several weeks later, the situation for Runes has not improved. On-chain metrics showed a severe decrease in activity, falling from a peak of 23,061 on April 26 to just 43 by May 9, according to data from Dune . Similarly, fees earned from Runes fell from a peak of $321,263 on April 26 to just $719 on May 9.

Runes activity per Dune

Although Ordinals have had a head start on Runes, launching in January 2023, Ordinal activity has also fallen sharply since the halving, dropping to 15,333 on May 8, a fraction of what was seen at their November 2023 peak when daily inscriptions would number around the 480,000 mark, according to data from Dune . Daily fees generated by Ordinals came in at just 2.02 BTC on May 8.

Ordinals activity per Dune

With Runes and Ordinals activity flatlining, Bitcoin miners are forced to fall back on standard transaction fees generated by users moving BTC.

On the Flipside

• BTC mining difficulty is a cumulative metric. Comparing a significant drop in 2021 (when the difficulty was around 20 trillion hashes) to a significant drop in 2024 is not a like-for-like comparison.
• It would be unfair to call Runes a flop at this time, considering the protocol is just three weeks old.
• Meme coin investing has developed an even worse reputation from the frequent rugs witnessed on other chains this cycle.

Why This Matters

Declining difficulty underscores Bitcoin miners’ challenges in the halving aftermath. As less profitable operations shut down, it paves the way for further consolidation of mining power among larger, more efficient players.

Bitcoin miners are under pressure as daily revenue tanks:
Bitcoin Mining Revenue Sinks Post-Halving: Are Miners Toast?

Binance faces fresh allegations of market manipulation post-DoJ charges:
Binance Whistleblower Alleges Profit Before User Protection

　　Disclaimer: Includes third-party opinions. No financial advice. See Risk Warning.