July 9, 2020

Bitcoin Hash Rate Drops Almost 45% Since 2020 Peak

The Bitcoin (BTC) network hash rate has just taken a steep plummet and is now down almost 45% from its 2020 peak.

The network’s hash rate sank from 136.2 quintillion hashes per second (EH/s) on March 1 to 7.5.7 EH/s today, March 26, according to data from Blockchain.com. 

Coin.dance — another analytics site for the coin’s blockchain — reveals a similar pattern, if less stark. The site reported a 2020 peak of roughly 150 EH/s on March 5, today down to 105.6 EH/s — a 29% decrease.

Bitcoin network hash rate, April 19, 2019–March 27, 2020

Bitcoin network hash rate, April 19, 2019–March 27, 2020, Source: blockchain.com

Hash rate and difficulty

The hash rate of a cryptocurrency is a parameter that gives the measure of the number of calculations that a given network can perform each second. 

A higher hash rate means greater competition among miners to validate new blocks; it also increases the number of resources needed for performing a 51% attack, making the network more secure.

After a volatile month in which Bitcoin saw dramatic, if short-lived, losses of as high as 60% to around $3,600 in mid-March, the network’s difficulty yesterday decreased by close to 16%. 

Difficulty — or how challenging it is computationally to solve and validate a block on the blockchain — is set to adjust every 2016 blocks, or two weeks, in order to maintain a consistent ~10-minute block verification time. 

This has a close connection to the network’s hash rate. Typically, when the network sees a low level of participating mining power, the difficulty will tumble — while in periods of intense network participation, it rises, working as a counterbalancing mechanism.

As reported yesterday, the last downward adjustment in difficulty was on February 25 of this year, when the coin’s price was around $9,900. Just three days later, it dropped to around $8,800, and by March 14, to nearly $4,800 — and as low as $3,600 on some exchanges, as noted above.

Interpreting the data

Theis relationship between price, hash rate, and difficulty has historically generated a trend that some analysts refer to as a “miners’ capitulation cycle.” 

The theory holds that while Bitcoin’s price remains high, and mining is profitable, both hash rate and difficulty inch upwards until they reach a threshold at which miners are squeezed and forced to liquidate more and more of their holdings to cover their expenses — leading to an increased supply of Bitcoin on the market. 

The “capitulation point” — at which some can no longer afford to keep mining altogether — then involves a decline in hash rate (reflecting lower participation) — as can be seen today —  and a subsequent reset in the network’s difficulty.

According to data from btc.com, Bitcoin’s difficulty is currently forecast to decrease by a further 16% in 14 days’ time.

source : http://raboninco.com/2oUl

One thought on “Bitcoin Hash Rate Drops Almost 45% Since 2020 Peak

  1. What worries me about this is the use of the mail. Because these people who are breaking nonsensical and stupid laws are probably, so far as the drug purchases go, only breaking very small laws as they’re likely buying small amounts. But when the Internet and Mail are brought into the picture, prosecutors will have all sorts of RICO and wire fraud type laws to call in, which could potentially put a ton of unfair legal pressure on good people, should the government ever decide to hack this community (which, under the recently reauthorized PATRIOT ACT, it could do at any time, in advance of getting a warrant).

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