Bitcoin’s Hash Rate Hits the Lowest Level Since November 2020 as China Intensifies Crackdown on Miners
The uncontested ruler of Bitcoin mining has been China. Around three-quarters of all BTC miners were reported to be in the Asian country at one stage. China, on the other hand, has ended up turning against the industry and is putting an end to it. As anticipated, this has had an impact on the BTC hash rate, which has plummeted to its lowest point in over seven months.
Will this have an impact on the main cryptocurrency’s value? The hash rate of Bitcoin is the degree of computational and processing power that miners provide to the BTC network. The higher resources committed to mining the top coin, the greater the hash rate.
The BTC hash rate is now dramatically decreasing, as per statistics from various sites. For the last week, the average hash rate was 129.1 million exahashes. This is a significant decline from the all-time peak of 180.6 million established by miners in mid-May. China is the primary – if not only – cause of the recent hash rate decline.
In recent times, the Asian government has intensified its crackdown on cryptocurrency miners. China is attempting to decrease its carbon impact, and BTC mining is viewed as a significant contributor. As a result, several mining-friendly areas in China have cracked down on illegal miners, with some going to the extent of providing prizes to people who inform about them.
Yunnan, China’s most recent province to tighten down on miners, was the most recent to do so. This is noteworthy, particularly considering Yunnan was China’s fourth-largest mining province. The ordinary BTC user is not affected by the reduction in hash rate since the network will remain safe as it has always been.
Nevertheless, it might be important in the context of conjecture. Is there a link between Bitcoin’s hash rate and its value? Scholars in both economics and technology believe that the two are inextricably linked. Nevertheless, disagreements occur over which of the two leads the charge and which trails.
Among the most vocal media figures on BTC, Max Keiser, believes that the value of BTC tracks its hash rate. In other words, the greater the hash rate, the higher the price, according to Keiser. “Hashrate (quite often) drives price,” said the creator of the Keiser news podcast. Even the most enthusiastic advocates of Bitcoin are unaware of this. It’s the center of the reward system. Satoshi’s ability to manipulate humans is what allows Gold 2.0 to exist.”
Christopher Bendiksen, the head of research at crypto investing firm CoinShares, is one analyst who differs. He argues that the hash rate is inversely proportional to the price. As a result, the recent decline should have no immediate impact on the BTC price. He challenged the assumption that pricing tracks hash rate in a comprehensive blog post a few years ago, noting, “It doesn’t.” And, furthermore, “how is it possible that this is the case?”
“In reality, I can only conceive of one situation where the hash rate might function as a ‘floor’ for prices,” he said. This is in the unusual case that miners are so well funded that they refuse to sell bitcoins at market rates, instead covering their expenses with liquid cash on their balance sheet while mining at a loss.”
“You decide whether or not that is true.”
— Max Keiser (@maxkeiser) August 8, 2018