Bitcoin Hashrate May Finally Slow as Miners Face Scorching Summer Heatwaves

Bitcoin hashrate and difficulty may drop during the North American summer months as miners restrict some of their operations.

Lower competition could provide some relief to miners already facing a profit crunch due to the halving event that reduced Bitcoin mining rewards by 50%.

The relentless growth of Bitcoin’s {{BTC}} hashrate, or the computing power of the network, may eventually slow down, providing some relief to miners as extreme summer heatwaves cause some operations to be disrupted.

While the hash rate continues to reach all-time highs, miners have seen profit margins squeezed in an already overcrowded industry after the halving reduced mining rewards by 50%. The main reasons for the increased hashrate include previously purchased mining platforms coming online and miners trying to upgrade their fleets with more efficient platforms to remain profitable post-halving. For example, on May 25, according to Luxor’s Hashrate Index data, the hash rate climbed to a record level of 658 exahash per second (EH/s).

Bitcoin network hashrate (Hashrate Index) in the last 3 months

However, this relentless growth is expected to slow down over the next few months as North America enters summer with 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,” Blockware Intelligence analysts said. “ASICs are large, powerful computers that can reach very high temperatures without proper cooling measures.”

In the summer months, reducing this heat becomes an even bigger problem; because companies need more power to cool their machines and/or shut down their operations due to high demand from energy consumers powering their air conditioners. “Many miners are forced to restrict their activities [during summer months] “Partly due to overheating, but also because residential energy consumption has reached levels high enough to activate demand response clauses in miners’ power purchase agreements,” Blockware added.

This seasonal event has resulted in lower hashrate over the last two summers, and lower hashrate means a decrease in the difficulty of mining a bitcoin block. “As we enter the summer months in the United States, we want to see if hot weather will force miners to cut back and therefore suppress hashrate growth like we saw in 2022 and 2023,” according to a June 17 report from Colin Harper. Head of content and research at Luxor Hashrate Index.

In fact, the hash rate has started to decline since reaching an all-time high in March. According to Hashrate Index data, it decreased by 10% to 589 EH/s as of June 17. Since most of the miners are located in the United States, especially in hot Texas, companies in North America shutting down their operations will likely lead to a decline in hashrate growth. “According to data from the University of Cambridge, approximately 37% of all Bitcoin mining occurs in the United States,” Blockware said. “As summer continues to warm up, it is reasonable to expect U.S.-based miners to experience heat-related outages.”

The story continues

Lower hashrate and difficulty due to reduced competition during the summer months could be a positive outcome for some miners. Additionally, some miners, such as Riot Platforms (RIOT), will be able to generate extra revenue from the electricity grid by restricting their activities within the scope of power purchase agreements.

Luxor’s Harper: “If hashrate continues to fall, miners may face a negative situation [difficulty] fix this week – here’s hope!”

Read more: JPMorgan Says Bitcoin Miners With Attractive Power Contracts Are Potential M&A Targets