Just over two months have passed since Bitcoin completed its second halving on July 9, 2016, slashing block rewards from 25 BTC to 12.5 BTC. While many feared the reduced incentives would drive miners out of the network, the reality has been strikingly different. Bitcoin’s hashrate has continued to climb, reaching approximately 1,517 petahashes per second (PH/s) by September 2016 — a clear signal that miners are not just surviving, but expanding their operations despite the revenue squeeze.
TL;DR
- Bitcoin’s second halving cut block rewards from 25 BTC to 12.5 BTC on July 9, 2016
- Network hashrate has grown to approximately 1,517 PH/s by September 2016
- BTC price has risen to around $623, partially offsetting the reward reduction
- Mining difficulty continues to increase as more hardware comes online
- Energy efficiency has become the dominant competitive advantage for mining operations
The Halving in Review
When block 420,000 was mined on July 9, Bitcoin completed its second scheduled supply reduction. The first halving in November 2012 had reduced rewards from 50 to 25 BTC, and this second cut brought them down to 12.5 BTC per block. For miners, this meant an overnight 50% reduction in their primary revenue stream. At pre-halving prices near $650, daily mining revenue dropped from approximately $14.4 million to $7.2 million across the network.
However, the market had largely priced in the event. BTC traded around $623 by September 10, 2016, down slightly from its pre-halving highs but well above the $430 range seen earlier in the year. This price appreciation — combined with steady transaction fee income — has helped cushion the impact of reduced block rewards for well-positioned miners.
Hashrate Defies Expectations
Perhaps the most remarkable trend in the post-halving period has been the relentless growth in network hashrate. Rather than contracting as some analysts predicted, the Bitcoin network’s computational power has continued to scale upward. The hashrate reaching 1,517 PH/s represents a significant increase from the start of the year, when it hovered around 800 PH/s.
This growth can be attributed to several factors. First, the deployment of increasingly efficient ASIC mining hardware — particularly Bitmain’s Antminer S9, which launched in mid-2016 with a hashrate of 14 TH/s and significantly better energy efficiency than previous models. Second, large-scale mining operations in China have continued to expand, taking advantage of cheap hydroelectric power in regions like Sichuan and Yunnan.
The Economics of Post-Halving Mining
For miners still operating profitably after the halving, the calculus is straightforward. At BTC $623 and a block reward of 12.5 BTC, each block yields approximately $7,788 in revenue. With 144 blocks mined per day, that translates to roughly $1.12 million in daily block reward revenue for the entire network. Miners with access to electricity below $0.05 per kWh and modern ASIC hardware can maintain healthy margins even at these levels.
The halving has accelerated a natural selection process within the mining industry. Smaller operations using outdated hardware — particularly GPU and FPGA miners who were already marginal — have been forced to exit. Meanwhile, industrial-scale operations with access to cheap power and cutting-edge equipment have consolidated their position.
Mining Difficulty Adjustments
Bitcoin’s built-in difficulty adjustment mechanism has played a crucial role in maintaining network stability post-halving. The difficulty retargets every 2,016 blocks (approximately two weeks), ensuring that blocks continue to be found roughly every 10 minutes. As the hashrate has grown, difficulty has increased correspondingly, keeping the network secure while maintaining predictable block times.
The steady increase in difficulty alongside hashrate growth suggests that mining remains profitable enough to attract new investment — a positive sign for the long-term health of the network.
Why This Matters
The post-halving period of 2016 offers a real-world case study in Bitcoin’s economic design. The fact that hashrate continued to grow despite a 50% reduction in block rewards demonstrates the resilience of the mining ecosystem. With BTC priced around $623 and the network processing blocks at a healthy clip, the fundamentals suggest that Bitcoin’s monetary policy is functioning as intended — gradually reducing supply issuance while maintaining robust network security.
The implications extend beyond mining economics. A higher hashrate means greater network security, making it increasingly difficult and expensive for any single entity to execute a 51% attack. As institutional interest in Bitcoin grows and the next halving (expected in 2020) looms on the horizon, the current period may well be remembered as a turning point in Bitcoin’s maturation as a monetary system.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency mining involves significant risk and technical complexity. Always conduct your own research before making investment decisions.