I found it interesting running into a few articles as of late and most people like to jump on the bandwagon and blame what's in the news. For example Bitcoins hash rate has been taking a hit as of late and with it is the news about China cracking down on miners not allowing them to mine bitcoin.
Sure this theory sounds all good and when looking at the charts may seem right
Factors to account for
There will ALWAYS be a steady increase in hash rate over time. This is because better more efficient miners are made and brought online. They produce more hash rate for the price as well as the power usage. It's a continued advancement in bitcoin mining just like any mining where equipment improves over time.
Interest and price play a big factor in how many people are mining for bitcoin including large mining farms as some will shut off a portion of their miners and the cost rate is to high. They need to operate in profit in the short term as many of these farms are not long term investments.
Let's line up the hash rate with the price and see what we get.
The price point of 34,000 puts us right at the point of Jan 31st of this year. When we combine the two hash rates they are nearly the same minus about 5m TH/s seems like a lot but it's not. We also have FUD hitting all new highs with crack downs, talk of regulations, rug pulls, less and less people having interest in it compared to Jan 2021 thus we see a reduction in mining.
If I had to speculate maybe 10m TH/s are a result of Chinas crack down. A less then 10% interest in that area and it could be even less. We also see bitcoin heading towards more of a negative trend in the last few days which also causes drops. We also see throughout the history we seem huge dips at times in mining hash rates for a few days before picking up again.
The one mega dip we see before a huge ramp up was in April 22nd of this year. What happened April 22nd of this year? 55 Billion in bitcoin was erased. No news about Chinas crackdown on miners at that time. It was just a hard reset in which people quickly started to min again having high hopes are the price rallied back to $60,000 per bitcoin.
Well here we are today nearly half of that but do we see the hash rate cut in half?
Nope
We see it a bit above the half way mark which would be steady progression of bitcoin mining.
To me this shows that miners are not going offline because of China's crackdown but instead due to the simple fact that prices are down. When we compared the hash rate with prices over time we can clearly see how well they line up with each other. Those two major dips at the end. Let's not forget bitcoin and crypto have seem some huge hits to their market caps in the last 3-4 weeks which lines it up to the drop in hashing rate.
*This article is for entertainment purposes only