Data shows the Bitcoin mining hashrate has only continued to rise recently, suggesting that the miners may not care too much about the crash.
Bitcoin Mining Hashrate Has Set Another All-Time High
As Bitcoin is a Proof-of-Work (PoW) network, chain validators called miners compete with each other using computing power to get a chance to hash the next block.
The “mining hashrate” is an indicator that measures the total amount of this computing power that the miners have currently connected to the Bitcoin blockchain.
Generally, the higher the hashrate, the more secure is the network as a 51% hack becomes much harder to perform. This is, of course, given that the hashrate is also sufficiently decentralized.
The indicator carries more significance than just that though as it can provide us with insight into the miners’ interest in mining the asset and also how the competition between them is looking right now.
When the hashrate goes up, it means that miners are finding the BTC blockchain attractive to mine on currently so new validators are joining and/or old ones are expanding.
Since the block rewards that miners receive as compensation for solving blocks on the BTC network stay constant (except for during halvings, where they are permanently cut in half), the hashrate rising potentially leads to everyone involved ending up with a smaller piece of the pie.
On the other hand, when the metric’s value decreases, it suggests that some miners are leaving the network, probably because they aren’t finding the coin profitable to mine at the moment. The remaining miners still connected to the chain then naturally have an easier time thanks to the reduced competition.
Now, here is a chart that shows the trend in the 7-day average Bitcoin mining hashrate over the past year:
Looks like the 7-day average value of the metric has been going up in recent days | Source: Blockchain.com
The aforementioned block rewards serve as the primary revenue source for the miners. Whenever the price of the asset decreases, the value of these rewards also trends down, and thus, large plunges in the asset can cause the miners to come under pressure.
From the chart, it’s visible that the 7-day average Bitcoin mining hashrate has gone up recently and has set a new all-time high, despite the fact that BTC has observed a crash recently as its price is now trading below the $26,000 level.
It would appear that the miners are unfazed by this price plummet, at least for now. Considering how sharp the price decline has been, though, it’s likely inevitable that the hashrate would eventually take a hit if the asset doesn’t recover soon.
This is because while the largest of the miners may be able to glide through this moment of uncertainty, some smaller miners who were already making little profits, to begin with, might be left with no choice but to disconnect.
At the time of writing, Bitcoin is trading around $25,900, down 12% in the last week.
BTC has seen a sharp plunge recently | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, Blockchain.com