BTC - Forget the 40% drop, Hash Rate is back to All Time Highs!
Talk about much ado about nothing...
The hash rate of bitcoin dropped some 40% a few hours before its price also tanked several days back...
Crypto twitter, as well as all sorts of news outlets, were running the story like it was the demise of bitcoin as miners were pulling out and the network was falling apart.
Fast forward a few days, and it looks like that wasn't the case at all...
Bitcoin's hash rate shot right back up and today is making yet another all time high:
(Source: https://www.blockchain.com/en/charts/hash-rate)
The drop took the hash rate down to 67 million TH/s, a drop of close to 40%.
Fast forward a few days and the hash rate is now at 108 million TH/s.
That was fast!
Why the big drop in hash rate?
That is a great question and something I haven't been able to find any explanation for.
At least not one that makes much sense to me.
Usually when you see big drops like this in hash rate, it is due to some major mining farm getting flooded out or shutting down, or a government banning mining, or something of that nature.
I haven't seen anything like that.
Also, it was odd that it happened just a few hours before the price of bitcoin tanked, something many crypto observers noticed as well.
If you have a logical reason why you think it happened, let me know in the comments below.
Does hash rate precede price?
This is the million dollar question.
The logical answer would say no, it's the other way around, price precedes hash rate.
However, there is a bit more to bitcoin's price cycle...
Check this out:
(Source: https://twitter.com/Breedlove22/status/1174821863198842880)
As you can see, the price rising does indeed start the cycle, but from there, it kind of feeds on itself.
As the network becomes more secure, it also becomes more attractive as an investment.
The more confidence investors have in the network, the more likely they are to buy, driving prices up and continuing the cycle.
So. when someone asks the question of whether hash rate or price rising comes first, you can be sure to answer them with a resounding...
"YES!"
(It's sort of a chicken or the egg type of thing)
With the hash rate continuing to grow at such an astounding pace, I would be shocked if the price of bitcoin didn't start responding with an upward trajectory as well.
This latest dip is likely a buying opportunity.
Stay informed my friends.
-Doc
good thing im not the mcafee character i would have to eat my own dick it went below 9000 although i do not believe it will stay there long
just getting the weak hands out by the looks of it
am a little surprised that baakt customer are not even dipping their toes yet for the most part though
have a great evening JR
Not sure what you mean, he only has to eat it if bitcoin is not $1 million by the end of next year...
lol i was making an example about me saying it wont go too much below 9000 and if it did it would bounce right back
good thing i didnt make promises like mcafee lol
i do believe bitcoin will hit at least 70k when it really starts to move again and thats minimum
have a great day
its very hard to know what the market will do but i was very surprised when it tanked to 8000 US
cheers bud
It all depends on how they calculate the total hashrate of the network... As far as I know, there isn't one accurate method, as that would require knowing API address of all mining pools in the world and fetching the individual statistics at the exact same moment.
It is also possible that the drop happened due to blocḱ(s) where the actual solving difficulty was a lot less than the expected difficulty. This is because "total" hash rate is essentially block difficulty divided by expected solving time, not the actual solving time.
Yep, but either way, it means something 'out of the ordinay' happened during that stretch of time in order to get such a large drop, especially when compared to the range of other drops.
As a coin developer and also maintainer of a mining pool, I can honestly say even large drops are totally normal... More there is hash rate, more drastic drops are normal as stratum difficulty depends totally on individual hashing powers of miners and stratum difficulty, not block difficulty, is what dictates when individual miners submit their hashes...
To sum things up, there will always be large drops, because the network eventually needs to stabilize, otherwise time between consecutive blocks would keep increasing until no more blocks can be solved anymore. Average block difficulty will always drift away from the target difficulty, but it will never drift away far enough to cause network stall...
Maybe just the trend is enough then? If not one or the other method is right?
Yep, either way the trend is telling, and something to take note of when you get an outlier.
There isn't one right method, it's all irrelevant as the only important thing is how much the average block difficulty has deviated from the target difficulty. Target difficulty is the difficulty that is required for constant time between two consecutive blocks. When hash rate is measured during time span of one second, difficulty is measured during time span set when the coin was created, usually fractions of minutes or several minutes. Both are same unit, but different magnitude.
Brilliant! I love that you know so much 👍🏼😃
Statistical analysis is the very first thing I did while still in business college... I can do it inside my head without using any written notes. On my first day at work, I did memorize about 1000 pages of data and present breakdown of the data with summary of all discrepancies. Basically I then verified it using Visual Basic for Applications (VBA) script running as Excel macro that did input all pages line-by-line from raw alpha-numeric dump file as 3-dimensional array and presented it as pivot table.
Nice! That’s a very handy skill to have. Unfortunately for me, I’ve forgotten more maths than I was ever taught 😃👍🏻
I was never taught maths... It's something I've mastered since I was 4 years old. Maths and languages are similar, either you have innate ability to master them, or you are just repeating other people.
I’m already seeing that bounce this morning just a few hours later...could be a good new indicator for me and my trading/ investing strats 🤔👍🏻💯
That chart at the bottom is interesting. Hash rate follows price, but price also follows hash rate. Either way an increasing hash rate is good news.
Yes it is! I will cross reference any future trades with hash rate as well then. Having on a screen in the background can’t hurt 👍🏻
I am not sure it is helpful for trades, but as a longer term investing tool, it's worthwhile.
all mind set games by big players to make people believe in what they think
Perhaps there were some games going on, not sure.
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