Bitcoin (BTC) Miners Capitulate as Hashrate Crashes 8% From All-Time High, Targeting New Difficulty Low

The “mining hashrate” refers to an indicator that keeps track of the total amount of computing power that miners have currently connected to the Bitcoin blockchain.

The Bitcoin (BTC) mining hashrate has continued its decline as the cryptocurrency’s price faced a setback in its recovery.

7-Day Average Bitcoin Mining Hashrate Dropped Over 8% Since All-Time High

The “mining hashrate” is a metric that measures the total amount of computing power currently connected to the Bitcoin blockchain by miners. This indicator is generally used to gauge the present state of BTC miners.

When the indicator’s value increases, it means new miners are joining the network and/or old ones are expanding their operations. Such a trend suggests that these chain validators are finding the network attractive.

On the other hand, a decrease in the metric suggests that some miners are choosing to disconnect from the network, possibly because they no longer find BTC mining to be profitable.

Now, here's a chart that shows the 7-day average Bitcoin mining hashrate's trend over the past year:

The 7-day average Bitcoin mining hashrate had surged to a new all-time high (ATH) by the end of last month, but since then, it observed a constant decline.

The ATH was reached as the BTC price rallied up, and the drawdown in the metric coincided with a period of bearish momentum for the cryptocurrency. This close relationship is because miner revenue is heavily tied to the asset's price.

These chain validators earn income from two sources, transaction fees and block subsidy, with the latter of the two being the more dominant source historically.

The block subsidy, which miners receive as a reward for solving blocks on the network, is paid out at a fixed BTC value and also at a more or less fixed time interval. This leaves the only variable related to it as the USD price of the cryptocurrency.

When the asset's value goes up, so does that of these rewards, and hence, that of the miner revenue. As such, miners tend to follow the coin's trajectory when it comes to adding or removing hashrate.

Interestingly, though, while Bitcoin did recover above the $62,000 level earlier, the hashrate didn't see any reversal, perhaps because the miners didn't think the increase would last. They may have been proven right, as the asset did erase some of its recovery over the past day.

One consequence of the constant mining hashrate drawdown is that the network is set to see a negative difficulty change in its next scheduled adjustment.

The difficulty is a feature of the Bitcoin blockchain that governs how difficult miners will find it to mine on the network. The existence of the difficulty is what allows for the block subsidy to be paid out at fixed intervals.

When the miners add hashrate, they naturally become faster at mining, and thus, they churn out blocks at a faster rate. To counteract this, the network ups the difficulty just enough to slow the miners down to the standard 10 minutes per block rate.

As the miners have been decreasing their hashrate recently, the block time has been slower than usual. The Bitcoin blockchain will now decrease the difficulty by over 4% to make things easier for the validators.

BTC Price

At the time of writing, Bitcoin is trading at around $59,700, up more than 19% over the past week.