This week, the Bitcoin price stayed above $6,000 and momentarily climbed to just shy of $7,000 level. For now, we are staying around $6,650.
While the price of the bitcoin has stabilized at current levels after a decline to $3,850 in the mid of this month, the fundamentals of the network are ready to take a hit.
The hash rate of the bitcoin network has already declined by over 44.4% this month. On March 1st, the hash rate made a new all-time high at 136.26 Th/s only to drop to 75.7 Th/s on March 25th, the largest drop since September 2019, as per Blockchain.com. This drop came after the bitcoin price crashed more than 50% on March 12.
“This March, Bitcoin has seen the largest drop in absolute hashing power in the history of the network, and its difficulty is set to experience one of its biggest adjustments yet,” noted crypto analysis company Glassnode.
This drop in hash rate means the mining operators have shut down their devices as mining bitcoin is not profitable for them at the current BTC price. This is because their cost of mining one bitcoin at $7,300 is about 9.5% higher than the current price of bitcoin.
The estimated number of tera hashes per second the Bitcoin network is performing
While the computational power of the network declined, the difficulty of the network hasn't seen any drop until now.
The mining difficulty, a measure of how difficult it is to find a new block, which adjusts every 14 days has now recorded its second-largest drop of nearly 15.61% in Bitcoin’s history. The biggest drop was registered in November 2011 of about 18%.
In November last year, the difficulty took a hit of 7% when the hash rate flattened during which the BTC price also fell over 35%.
A drop in difficulty means it would be easier for the miners to find new blocks and get awarded 12.5 BTC before the halving.
With halving coming up in less than two months, block rewards to be cut in half and the cost of mining one bitcoin to further increase between $12,600 and $ 15,100, the price of bitcoin has to buckle up and push for higher or the network could see the exit of miners and another decline in the hash rate.