Bitcoin miners (BTC) raised $ 60 million in an average of 30 days as of May 5. This showed the first signs of recovery from last month’s sharp decline in sales that followed the failures of miners in China’s energy-rich provinces.
In April, coal mining accidents and subsequent inspections in Xinjiang impacted energy supplies to the regional cryptocurrency mining industry. This forced the miners to turn off their ASIC (Application Specific Integrated Circuit) hardware, which only generates computing power to secure the “work” and integrate it into the proof-of-work of Bitcoin.
According to data from Blockchain.comBitcoin Mining revenue fell from its average 30-day high of $ 60 million on April 16 to $ 57.08 million on May 2. The specified resource collects data from miners from block rewards and transaction fees paid to miners.
The drop in profits coincided with a drop in hash rates on the Bitcoin network, indicating that many ASIC hardware went offline after losing its main power source. The total hash rate per second (7-day average) fell from a record high of 172 EH / s on April 16 to 131 EH / s on April 23, a decrease of around 30%.
Since then, it has rebounded to 168 EH / s on May 5, indicating that miners resumed Bitcoin operations four days ago after a significant drop in mining difficulties.
Effects on the Bitcoin spot rate
Bitcoin prices suffered a significant drop after China’s failures.
The benchmark cryptocurrency corrected lower after hitting an all-time high near USD 65,000 on April 14th. The Chinese FUD worriedly accelerated the sell-off, dropping the BTC / USD exchange rate to just $ 50,591 on April 25.
Bitcoin’s price and hash rate drops occurred almost simultaneously, providing further evidence of a higher positive correlation between the two metrics.
Put simply, the hash rate represents the computing power of the Bitcoin network. This means that the higher the hash rate, the higher the cost of the theoretical “attack” on Bitcoin, which makes this metric synonymous with the security of the network.
Bitcoin rate rebounded to just over $ 55,000 on Wednesday, which is largely the same as the hash rate. This means that resetting the network will help maintain the prevailing bullish bias of the cryptocurrency.
Further tailwinds come from projections with Bitcoin mining difficulty levels. For example, data from BTC.com shows it should increase a modest 1% in the subsequent bimonthly adjustment (or 2,016 block periods) on Thursday next week.
Network Difficulty, which shows how difficult it is for nodes on the Bitcoin network to solve the equations needed to mine, was down 12.6% on May 2. This tends to increase margins for both inefficient and efficient miners, and promises lower risks for bitcoin sell-off at the end of producers.
With an upward correction looking more likely and with mining activity increasing on the Bitcoin network, the long-term bias for the cryptocurrency remains optimistic.
A previous report by Cointelegraph compared the correlation between Bitcoin prices, hash rate, and mining difficulty, ruling out that the former, despite the popular “price follows hash rate” mantra, had a lagged correlation with the latter two.
The BTC / USD exchange rate had closed at $ 28,990 in 2020 after Bitcoin’s network troubles dropped from 19,679 TH / s in the November-December session to 17,438 TH / s. There was also a significant drop in hash rate during this period, but Bitcoin’s general upward trend remained unaffected.