Bitcoin Hash Rate Slumps 26% After Difficulty Increment
The total hash rate of the Bitcoin network is down 26 percent from last week’s peak, three days after the mining difficulty was increased by three percent. Hash rate is a measure that tracks the total computational power of the Bitcoin network. Technically, it is a metric showing how interested miners are in confirming transactions and securing the network.
Hash rate is an on-chain metric that is heavily influenced by price. The higher the hash rate, the more miners there are and the more confident they are on future prices. The problem is that when there are more miners and the hash rate rises, the Bitcoin network automatically re-adjusts, increasing mining difficulty meaning it would take more resources for miners to earn coins. With a higher adjustment, most switch off their inefficient mining gear causing the hash rate to fall. Before the Oct 17 increment, the network hash rate had soared to new highs of 157 EH/s despite the significant reduction of Bitcoin block rewards following halving back in May.
Impact on the BTC Price:
Neutral to bearish. If indeed hash rate follows prices, then there is a bearish divergence following yesterday’s price uptick. The BTC price is rallying, breaking above key resistance levels. At this rate, more miners will likely flow back expecting to earn and hold more BTC.
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