On-chain data shows Bitcoin mining Hashrate has dropped to its lowest level since October as miners continue to exhaust farms.
7-Day Average Bitcoin Mining Hashrate Has Dropped Recently
Bitcoin “Hashrate” refers to an index that keeps track of the total amount of computing power that miners have attached to the blockchain. This metric can be used as a proxy for the behavior of network authenticators.
If the Hashrate value increases, it means that new miners are joining the chain and/or old ones are increasing their resources. Such a trend means that BTC mining looks attractive to these verifiers.
On the other hand, the indicator that sees the decline suggests that some miners have decided to disconnect their rigs from the network, possibly because they find the cryptocurrency unprofitable.
Now, here’s a chart from Blockchain.com that shows the trend in the 7-day average Bitcoin Hashrate over the past year:
The 7-day average value of the metric seems to have been going down in recent months | Source: Blockchain.com
As shown in the graph above, the 7-day average of Bitcoin Hashrate set a new all-time high (ATH) of around 1,151 exahashes per second (EH/s) back in October. Since this record, however, the value of the index has decreased.
What causes this condition? The answer to that question may lie in how much the miners earn. Miners earn their money in two ways: block grants and transaction fees. In this case, the former contribute the largest share of their income.
Block funding remains stable in terms of BTC value (except for Halving Events, where it is permanently halved), but its USD value fluctuates around the value of the cryptocurrency. Thus, the miner’s income depends more or less on the price action of the asset.
Back in October, Bitcoin met a new ATH, so miners responded by improving their positions. When the bullish price action did not continue, however, the group began to pull back. As a result, the 7-day average Hashrate dropped to around 998 EH/s, its lowest level in over three months.
Interestingly, the recent continuation of the index’s decline has come despite the fact that the cryptocurrency has made some recent recovery. This may be a sign that miners are not yet convinced by the return of bullish momentum.
A possible consequence of the drop in Hashrate may be a decrease in the difficulty of Bitcoin mining during the next network maintenance. According to data from CoinWarz, miners took an average of 10.6 minutes per block since the last fix, which is much slower than the blockchain goal of 10 minutes.
The details related to the upcoming Difficulty adjustment | Source: CoinWarz
To correct this, Bitcoin may be forced to reduce its Difficulty by 5.6% in the next two-week correction. However, something to note is that there is about a week left until this event, so the network’s response may change depending on how the Hashrate behaves in the coming days.
BTC price
At the time of writing, Bitcoin is floating around $95,500, up more than 5% in the past seven days.
Looks like the price of the coin has gone up recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, chart from TradingView.com
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