Bitcoin (BTC), the largest cryptocurrency, became greenish in the past weeks, closing higher by nearly 30% in the past month. Despite this price increase, it’s a different story when looking at the network hashrate. The Bitcoin network hashrate went into freefall on October 18, decreasing steeply from 146 exohash per second (EH/s) at the time. In less than one month, the network hashrate dropped by 39 EH/s, according to Blockchain.com.
Bitcoin Network Hashrate Decline Continues
According to the blockchain explorer, the Bitcoin network hashrate currently sits at 107 exohash. About four days ago, the network hashrate was at 132.9 exohash. The continuous dropping of the hashrate seemingly indicates that more miners are turning off their machines. Although the drop doesn’t directly affect the cryptocurrency price, it’s worth noting that the Bitcoin network hashrate is a key security metric.
“The more hashing (computing) power in the network, the greater its security, and its overall resistance to attack,” according to the blockchain explorer.
One plausible reason behind the decline in the Bitcoin network hashrate is the seasonal migration of Bitcoin miners in China. Notably, China accounts for most of the active Bitcoin miners and computing power in the network. Following the Bitcoin mining map by the University of Cambridge, about 65 percent of Bitcoin miners are in China. Other countries like the United States, Russia, Kazakhstan, Malaysia, and Iran hold 7.24, 6.90, 6.17, 4.33, 3.82 percent, respectively.
Seasonal Migration of Bitcoin Miners
Rainy season in China results in more energy production, as there is ample water supply to power electricity dams. Thus, Bitcoin miners usually get excess energy supply at a cheaper rate, making their mining business more profitable. However, as the dry season nears, more miners tend to shut off their mining equipment in search of favorable regions for mining.
Bitcoin hashrate has dropped by ~45% over past 3 days, presumably due to Chinese miners relocating equipment for the dry season.
Hopefully in coming years the semi-annual hashrate fluctuations will decrease in volatility as China's share of hashrate continues to drop. pic.twitter.com/eBElCCniJU
— Jameson Lopp (@lopp) October 27, 2020
Due to the concentration of mining in China, the Bitcoin network hashrate began dropping as a result. However, the declining Bitcoin hashrate makes little to no impact on the price of the digital currency. Bitcoin continues to post increases, rising to another yearly high at over $14,000. Currently, the cryptocurrency trades at $13,395 on Coinmarketcap. It sees a market capitalization of over $248 billion, from 18,531,918 BTC in circulation.