Not long ago, we reported that Bitcoin's hash rate was on the rise and even reached a new all-time high (ATH). Now with the COVID-19 virus paralyzing companies and entire economies, it seems that the Bitcoin network and the miners that work on it are not excluded from the impact.
Since reaching its peak on the 8th of March, recording a hash rate of around 130 EH per second, the Bitcoin
hash rate has now fallen back to 70 EH's. A decline of approximately 45% since its ATH.
What does this mean?
Whether COVID-19 is to blame for the decline or not is hard to say. It is a fact that some miners in China were forced to close down, be it temporarily. Also, the largest Ethereum
miner in the United States has dedicated some 6,000 miners to help find a cure for Corona instead of mining Ethereum
blocks, other Bitcoin
miners might be doing the same thing.
Meanwhile, some analysts have found a relationship between the price, hash rate and difficulty of Bitcoin, claiming that historically generated a trend. This trend is known as the miners capitulation cycle. This cycle is explained as following: as long as the price of Bitcoin remains 'high' and therefore mining is profitable both the hash rate and difficulty will increase. This will continue until a point is reached where this is no longer the case and some miners are forced to sell their holdings to cover their costs, this, in turn, leads to an increased supply of Bitcoin on the open market.
When this additional supply forces the price downwards, some miners
, not being able to break even are forced out of the market. Then the difficulty is lowered, and the cycle starts again.