The miner’s current revenue from daily block rewards has increased an impressive 488% since halving the Bitcoin network in May 2020.
After dropping to $6.8 million in the months following the event, halving Bitcoin As of May 11, 2020, block bounty miners’ revenue is now hovering above $40 million, according to data from blockchain analytics firm Glassnode.
Bitcoin mining is a highly competitive process of creating new cryptocurrencies by solving complex mathematical puzzles with the help of computers with specialized software installed. By checking Bitcoin transactions and adding them to the blockchain, miners earn rewards that consist of transaction fees and a base reward for each block they mine.
The block reward, also known as the cash-based reward or subsidy, is halved after every 210,000 blocks mined, or approximately every four years – hence the expression “the halving”.
Each event halved reduces the rate of creation of new Bitcoins until no more coins enter the network’s supply in the year 2140.
This represents an increase of approximately 488% since the last halving. Current values are, however, even lower than the $60 million peak Bitcoin miners enjoyed in May of this year, just before China’s massive crackdown on the mining industry.
This is also 185% higher than values recorded in the period before 2020, falling by half when miners were paid between $14 million a day.
Bitcoin network recovered
Although miners will have to work twice as hard to enjoy the same rewards before halving, the increase in miners’ income described above suggests that there is a silver lining.
To keep up with the financial pace, mining companies need to invest in more machines as the block’s payoff diminishes. Doing so, however, means spending more money and believing that the long-term future of the business is viable.
Following that thinking, rising revenue suggests that mining companies are investing in expansion and remain confident in mining. This conclusion is also surprising given the aggressive crackdown on China’s mining industry this year.
In mid-June, after several Chinese provinces in China expelled Bitcoin mining operators, the country’s central bank ordered banks and payment platforms to sever any relationship with cryptocurrency service providers.
All of this, in turn, resulted in the mass exodus of miners out of China, with many of them moving their operations to North America or Kazakhstan. It also led to the collapse of Bitcoin’s hash rate – the total computing power of the network – and the difficulty of mining.
Mining difficulty – a measure designed to calculate how much computing power is needed to produce new Bitcoins – peaked above 25 trillion in mid-May. Mining difficulty is measured using a relative unit that was at “1” when the Bitcoin genesis block was mined on January 3, 2009.
Right after the Chinese crackdown, this difficulty dropped by up to 54%, making it almost twice as easy to find new blocks.
Value has steadily rebounded since then, with five consecutive increases taking the difficulty to nearly 19 trillion. The next difficulty adjustment, which is scheduled to take place in the next 8 hours, should result in another increase of about 3%, according to BTC.com.
Glassnode co-founders Jan Happel and Yann Allemann said the current Bitcoin difficulty graph “will soon signal a positive recovery as more miners come back online”.
“The last comparable event was after the bear market capitulation in December 2018, which took 164 days to turn positive. The current recovery of mining took 120 days”, they wrote.
#Bitcoin Difficulty ribbon is soon to signal a positive recovery as more miners come back online.
The last comparable event was following bear market capitulation in Dec 2018, which took 164-days to flip positive.
The current mining recovery has taken 120-days. pic.twitter.com/l2Nmc9RYTR
— Jan & Yann (@Negentropic_) October 4, 2021
With the price of the world’s leading cryptocurrency currently eyeing a rebound to $50,000, and the network’s hash rate returning to values last seen in June, miners now actually seem more confident and more willing to turn on more machines. to get your rewards.