Big drop in hashrate

[DooMAD]

I get that the media need their attention-grabbing headlines, but are we still not past taking everything they report at face value yet?

Apparently, not. News outlets have been getting worse with every month that went by, but people keep donating traffic to them. They hold the golden formula to keep triggering overly sensitive perma bulls.

And then we have social media influencers who keep reporting about these articles, which only adds fuel to the fire. You can't escape from these attention grabbing articles anymore. I guess we just have to accept it and move on.

Experts are not sure whether it is worth linking these two phenomena directly since previously significant decreases in hash rate did not significantly affect the rate. It is possible that these are just interesting coincidences. It is also possible speculative behavior of a large player who suddenly threw a large number of coins onto the market. At the moment, no one gives the exact reason for the fall.

At this stage I'm inclined to chalk it up to ignorance and herd mentality.  Someone mistakenly thought the hash rate dropped alarmingly, not realising it was just lousy metrics.  It gets reported in the media without being fact-checked.  Speculators panic.  Snowball from there.  Lots of fuss about not much.

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[Carlton Banks]

At this stage I'm inclined to chalk it up to ignorance and herd mentality.  Someone mistakenly thought the hash rate dropped alarmingly, not realising it was just lousy metrics.  It gets reported in the media without being fact-checked.  Speculators panic.  Snowball from there.  Lots of fuss about not much.

I hate to be Mr Contrary (or do I ), but the evidence for a speculator panic is also a bit thin. Normally, big price movements cause mempools to quickly fill up with panicky transactions, and especially for transaction fees to go up, that's the real sign of people sending BTC to exchanges in a panic

yet neither of these things happened, mempools have been pretty quiet, and certainly not in expensive fees territory (do you call 35 sat/byte expensive? I don't, and neither do the fee panics of 2017 and 2015)


I dunno, you could argue "segwit capacity increases stopped that", but blocks weren't alot fuller than recent averages (coming off the back of alot of 900kB blocks per 24 hour averages recently...)


So it's all thoroughly mysterious. The sort of people that leave all their BTC on exchanges are those who have personal/political connections to the owners (i.e. they get to keep their coins if there's any fraud, because they're in on the fraud). So if those people sold to create all that volume, then they got scammed by this. That sounds unlikely.


Are we really to conclude that in 2019, every idiot speculator is keeping pretty much all their BTC in their exchange account, even after Bitcoin became more well known for exchange hacks/fraud than for almost any other reason? It all sounds a little thin on credulity, no matter how you package it up

[bellicose]

An absolute pragmatic event. I think there will be no problems in the future, but still I would like some specifics why this happened. Any information on this from trusted major sources?

[Youghoor]

The drop in the hashrate doesn't really matter since it has no effect on the market value of Bitcoin. A drop in the total hashrate of bitcoin will only affect the difficulty of mining Bitcoin.  But there is no direct relation between the fluctuations of the price of Bitcoin to the total hashrate of the entire bitcoin blockchain network...

[Razick]

The drop in the hashrate doesn't really matter since it has no effect on the market value of Bitcoin. A drop in the total hashrate of bitcoin will only affect the difficulty of mining Bitcoin.  But there is no direct relation between the fluctuations of the price of Bitcoin to the total hashrate of the entire bitcoin blockchain network...

Doesn't the hash rate affect the price because the more miners the higher the price generally of a coin, and the last miners who focus on a coin then the price goes down. The drop in hashrate is probably a negative sign for the price in the short term.

[Carlton Banks]

So the current Bitcoin block has taken nearly 2 hours to solve, what hashrate drop are we going to spuriously attribute this (fairly typical) event to? 75% drop? 101% maybe?

[ILuckyGuyI]

We still don't know the reason behind the fall on Bitcoin price and I am not sure about why the hash rate dropped critically if it really happened. Because various sources still say different things about hash rate.

[Carlton Banks]

We still don't know the reason behind the fall on Bitcoin price

yes we do, it's the same reason every single time: people sold faster than people bought

and I am not sure about why the hash rate dropped critically if it really happened. Because various sources still say different things about hash rate.

1 thing happened with complete certainty, the average hashrate during the supposed crash was higher than 2 weeks before. That means the "crash" doesn't matter, whether it happened or not


or to put it another way...

today, the exact same thing happened, but for some reason no-one is hyping it up. If you don't know that blocks sometimes take a long time to find, and sometimes take 5 seconds, and that doens't mean the hashrate is going crazy, but that it's completely normal, then: welcome to Bitcoin it's been like this for 10 years

[figmentofmyass]

We still don't know the reason behind the fall on Bitcoin price

yes we do, it's the same reason every single time: people sold faster than people bought

bingo! the only thing we know is that supply overtook demand. i dunno why people are so obsessed with rationalizing about the underlying causes of price moves.

1 thing happened with complete certainty, the average hashrate during the supposed crash was higher than 2 weeks before. That means the "crash" doesn't matter, whether it happened or not

it's incredible we are having these discussions considering difficulty is rising.

[UsernameBitcoin]

This big drop in hashrate is kind of unprecedented. Well not really, but despite that there have been big drops in the past, this one is pretty big compared to normal.

[DooMAD]

but despite that there have been big drops in the past, this one is pretty big non-existent compared to normal.

FTFY.  Difficulty is going up and it doesn't do that if the hash rate is plummeting.  People are jumping at shadows:

https://www.blockchain.com/en/charts/difficulty

[Deborah Christine]

Big drop in hashrate are overly responded to. Hashrates that drop are basically common things that have happened and it happened some time before. Overreacted because the decrease in the hash rate coincided with the decline in the price of bitcoin. Whereas the decrease in hashrate has no correlation with the decline in the price of bitcoin.

[Carlton Banks]

bingo! the only thing we know is that supply overtook demand. i dunno why people are so obsessed with rationalizing about the underlying causes of price moves.

well I've said this once already this week, but it bears repeating...

the financial press have an incentive to make it seem like:

a) they know why the price moved, and which news event moved it
b) you therefore need to read the financial press to keep informed of such things


this is just self-serving nonsense, particularly when you consider that this model of disseminating information is just begging to be corrupted by big players in any market who want to send false or manipulative signalling to the readers. When there's money to be made, anyone giving you "news" or "advice" about markets is an unlikely friend. It's a game of poker, people aren't gonna show all the other players their cards and ask them if they want to swap a full house for a pair of 2's

[Darooghe]

I Agree with #48. If mining wasn't profitable some people would turn their mining machines off, the hashrate would fall, difficulty will adjust so it is profitable for the miners still operating. People will then see that it is profitable to mine again, so turn their machines on and invest more into new equipment starting the whole process over again. Profitability will always tend to zero, with some lead and lag time causing variance in miner profitability. The system was designed this way to incentives the appropriate hashrate to secure whatever the current value of the network is in terms of market cap. Thanks to Satoshi Nakamoto

[senne]

There was a news that Innosilicon's (mining company) data center caught fire burning around $10M worth of equipment. Though there is no public comment from the company out yet. Many people are blaming this fire for the drop of the hashrate. Also, a news came that the rainy season in northwestern part of China created a problem for one more mining company.

News source
https://cointelegraph.com/news/10m-mining-farm-fire-takes-blame-as-bitcoin-hash-rate-wobbles

[edutBTC]

Hashrate is now more volative than the volatility of the BTC price. Under normal circumstances they go down and up together, but recently this is the opposite.I don't understand this thing...

[DaveF]

There was a news that Innosilicon's (mining company) data center caught fire burning around $10M worth of equipment. Though there is no public comment from the company out yet. Many people are blaming this fire for the drop of the hashrate. Also, a news came that the rainy season in northwestern part of China created a problem for one more mining company.

News source
https://cointelegraph.com/news/10m-mining-farm-fire-takes-blame-as-bitcoin-hash-rate-wobbles

There is no drop in hashrate.
In the last 24 hours there have been 148 blocks mined.
Anyone saying there is a drop in hashrate flat out does not understand mining.

As has been said before

Anything less then the 2 week (2016 block) adjustment is essentially meaningless.
But if you are really worried about it. The next thing is the 1 week number which is at 1039 which is more then the 1008 of 1 block every 10 minutes.
If you are looking at the last 24 hours, call me when it drops below 133 per day for 2 days back to back. Other than that your are just wasting time.

-Dave

[Carlton Banks]

If a mining farm does go offline, other miners are taking delivery of new hashing units all the time

And as has been mentioned, if the miners all push the rate too high, they have no choice but to stop because the price cannot sustain profitability at too high a difficulty


honestly, you're all apparently afraid of something you've never taken 5 minutes to think about previously

[Wind_FURY]

If a mining farm does go offline, other miners are taking delivery of new hashing units all the time

And as has been mentioned, if the miners all push the rate too high, they have no choice but to stop because the price cannot sustain profitability at too high a difficulty


honestly, you're all apparently afraid of something you've never taken 5 minutes to think about previously

I believe some miners are speculators too. Sometimes they might take a loss now, but knowing that they will "hit gold" according to their estimates/analysis.

[Mike Mayor]

What makes you think it might be authorities? Because it might be in China? I'm not sure what is going on with them or what their stance is on bitcoin. Very unclear. That drop is really odd I am glad someone brought it up. I am not sure why more people didn't say something about this. I think it is as you have guessed a system crash of a farm or something like that. THats one big farm though.

 

If a mining farm does go offline, other miners are taking delivery of new hashing units all the time

And as has been mentioned, if the miners all push the rate too high, they have no choice but to stop because the price cannot sustain profitability at too high a difficulty


honestly, you're all apparently afraid of something you've never taken 5 minutes to think about previously

No. The price will go up if the difficulty increases. Simple supply and demand. It will take more effort to get something it will be worth more.

I am not sure if people are afraid, it's just interesting.