Data shows Bitcoin hashrate is now down 8% from the new all-time high. Here’s what might be causing the metric to plummet.
Bitcoin Hashrate Plunges Down After Setting New ATH
As per the latest weekly report from Arcane Research, the BTC hashrate has declined 8% since 10th December, the date the metric set its new ATH.
The “mining hashrate” is an indicator that measures the total amount of computing power connected to the Bitcoin blockchain network.
A rise in the value of this metric leads to better performance of the network. Also, as a high hashrate usually implies a high number of miners present on the chain, this trend also results in higher decentralization, which in turn means better security for the crypto.
On the other hand, when the value of the indicator trends down, it means miners are leaving the network. This can lead to worse performance and security of the Bitcoin chain.
Upwards movement in the indicator in usually associated with a bullish trend as it shows mining BTC is currently profitable, and hence more miners are being attracted to the chain.
Now, here is a chart that shows the trend in the value of the Bitcoin hashrate over the past year:
The BTC mining hashrate seems to have significantly declined since the ATH | Source: The Arcane Research Weekly Update - Week 50
As you can see in the above graph, the indicator just set an ATH less than a couple of weeks back. However, the metric has already shed 8% of its value since then.
What Is The Reason Behind This Drop?
The report explains that as the BTC hashrate achieved its ATH, miners started producing blocks at such a rapid rate that the network made an upwards difficulty adjustment on the next day (11th December).
Related Reading | Data: Bitcoin Miners Shift From Being Spenders To Hodlers In Past 2 Years
As higher mining difficulty leads to lesser profitability, some of the miners who had high electricity costs decided to shutdown their operations.
This lead to the 8% decline in the hashrate. Now, due to this drop, the block production rate has also naturally dropped. However, the block production rate is actually lower at the moment than what’s required on the Bitcoin chain.
The report notes that because of this, the difficulty is now expected to decrease again next Saturday, paving way for the hashrate to grow once again.
Related Reading | Study Shows 0.01% Hold 27% Of Bitcoin Supply. Who Are They?
At the time of writing, BTC’s price floats around $48.8k, up 2% in the last seven days. The below chart shows the trend in the price of BTC over the last five days.
BTC's price seems to have surged up | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research