BTC India
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Morning chaps! I was looking at the hash rate graph (bitcoin price in black and hash rate in blue) and I noticed that when bitcoins price dropped in May 2021, hash rate dropped because it was less profitable to mine, but doesn’t seem to follow that trend after that when price drops. why is that?
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View Reddit by RobertLee2354 – View Source
Cuz they are not directly correlated like you are insinuating.
May22 hash rate dropped because of the Chinese mining ban…..price dropped because there was more selling than buying. Full stop.
Was there more selling because Chinese miners were fearful? Because US HODLers were fearful? I dunno, I can only speculate. In either case I DCAed as usual and got extra corn for my fiat
I believe that drop was due to china banning miners and them being moved overseas. https://www.cnn.com/2021/05/24/investing/bitcoin-mining-china-crackdown-intl-hnk/index.html
You picked a bad period for making this correlation. As the other comment says, in 2021 the hash rate dipped when a weather event put many Chinese miners off-line, and then again a short time later when Chinese officials shut down miners all over the country
Zoom out for something more interesting
In November 2020, the Bitcoin price surged, after being stable at around 13500 for some time. Normally, a price surge is followed by a hash rate increase. But there was a manufacturing shutdown in about September 2020 at TSMC, the only supplier of ASIC chips to ASIC box makers. This shutdown and the price surge created a period where existing miners earned windfall profits
The so-called price fall you’re marking in 2021 did not actually happen. The price did not fall below 13500, which is the marker price for the stalled hash rate
If you want to see a hash rate fall caused by a price fall, look at 2018. There was a 6 month lag from the price fall to the hash rate fall. The hash rate fall was so severe that Bitmain discounted mining boxes to $400, well below cost, and Bitmain almost became insolvent, had to abandon its IPO plans