Bitrabo Editorial
Recent data reveals that the Bitcoin Mining Hashrate has dropped nearly 10% from its recent all-time high (ATH). Let’s explore the reasons behind this decline.
Significant Decline in Bitcoin Mining Hashrate
The “Mining Hashrate” refers to the total computational power that miners contribute to the Bitcoin network, measured in hashes per second (H/s) or terahashes per second (TH/s).
Bitcoin operates on a Proof-of-Work (PoW) consensus mechanism, prompting miners to utilize this power to solve complex mathematical puzzles and compete for the opportunity to add new blocks to the blockchain.
Miners are motivated by the block reward, which consists of transaction fees and a block subsidy, serving as their compensation for adding new blocks.
Mining remains profitable for a miner only if this reward exceeds their electricity expenses incurred in running mining operations. Monitoring changes in the Mining Hashrate can indicate whether miners are facing challenges or are thriving.
An increasing hashrate signifies that either new miners are entering the network or existing ones are expanding their operations, suggesting a profitable environment. Conversely, a declining hashrate indicates that certain miners find BTC mining unprofitable and decide to disconnect.
Below is a chart depicting the trend of the 7-day average Bitcoin Mining Hashrate over the past year:
The chart shows that the 7-day average Bitcoin Mining Hashrate surged earlier this month, reaching a new ATH above 693 TH/s. However, it experienced a significant drop of nearly 10% in the week following this peak, settling down to 628 TH/s.
This trend may be attributed to recent fluctuations in the price of BTC. As noted, miners derive their earnings from the block reward, mainly influenced by the block subsidy and transaction fees.
Among these, the block subsidy constitutes the bulk of their income. This subsidy is fixed in BTC terms and distributed at regular intervals, meaning the only variable affecting it is the BTC price in USD.
Consequently, the revenue for BTC miners is closely linked to the spot price of Bitcoin. The surprising spike in hashrate to the ATH occurred despite a decline in Bitcoin prices, indicating possible miner speculation of a price recovery that didn’t materialize. This could explain why miners have opted to disconnect some equipment from the network, leading to the notable drop in the 7-day average Hashrate.
Current BTC Price Status
As of now, Bitcoin is valued at approximately $58,600, reflecting a rise of over 6% in the past week.