The Bitcoin network hash rate has taken somewhat of a nosedive in the past few days. According to the seven-day average, the total hash rate fell from 54 quintillion tera hashes per second to 46 quintillion tera hashes per second, and it’s still falling. It’s actually the largest dip in hash rate this year so far and if it continues to slide at this rate it could become the biggest hash rate decline ever.
It can be argued that this drop in hash rate isn’t actually a bad thing, as it simply means that mining becomes more profitable for all those involved – so miners, don’t forget to thank the miner behind this drop.
An Unusual Set of Events
The network hash rate fluctuates radically every day, this volatility is normal. However, a sudden drop of 14.8% is very unusual and indicates that something happened. What doesn’t make sense is that there have been no new reports of heavy flooding in the Sichuan region – a region in China popular for crypto mining – no reports of miners being closed down or a sudden devaluation in the price of Bitcoin. This decline could be linked to BTCC closing down and taking their miners offline, but it only controlled around 1% of the network hash rate.
Is Craig “Satoshi” Wright Causing the Hash Rate Drop?
The true identity Satoshi Nakamoto is still unknown, but Craig Wright often claims that he is the true identity behind Satoshi. He has never managed to prove it, and as a slap in the face to “his” work, Wright created Bitcoin Cash with a hard fork. Bitcoin Cash uses the same SHA-256 algorithm, meaning miners can switch between mining Bitcoin and Bitcoin Cash with relative ease.
Bitcoin Cash has a hard fork coming up and miners are still debating whether they should use ABC or BSV client. This has led to a decline in the Bitcoin Cash network hash rate and Craig Wright has switched all of his mining power from Bitcoin Core to Bitcoin Cash to take advantage of this new profitability. When the hard fork takes place on November 15th, we will likely see the Bitcoin Cash hash rate climb again, making it unprofitable at the cryptos current price. At this time Wright will likely switch his miners back over to Bitcoin Core and the hash rate will rise again by roughly 14% – if it is Craig Wright causing the drop, of course.
America Making Mining Tougher
While it’s not a factor that will have contributed to the decline, it could postpone the time it takes for the hash rate to climb back up – unless this is the doing of Craig Wright. Trump and his administration have imposed a new level of import tax on Chinese goods, meaning people buying the new Antminer T15 will have to pay huge import taxes. This is likely going to put people off buying the new Antminer and could harm the crypto mining growth in America. However, Antminers come used and often rusty so many miners are migrating to the far superior Bitfury range.
The network hash rate falling isn’t cause for alarm alone, but it certainly raises some serious questions. The fact that one miner or mining pool controlled at least 14.8% of the total network hash rate is a scary prospect for crypto enthusiasts as it means that 51% attacks are more likely when these miners leave. Hopefully more miners fill the gaps rather than existing pools to spread out the mining distribution evenly rather than one party holding the power.