The recent volatility of Bitcoin has caused serious technical damage to its market structure, and has also led to the large-scale surrender of BTC miners. Bitcoin has dropped from a high of $ 10,500 to a low of $ 3,800, making it no longer necessary to mine many small Mining companies are profitable.
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The surrender of miners is reasonable and can be reflected in the computing power of Bitcoin, which has declined significantly in the past three weeks.
The decline in computing power may not be over, because some simple factors seem to indicate that more miners may surrender in the short term.
However, the bulls may be happy that the decline in computing power is likely to eventually have a positive impact on the price of Bitcoin, and the surrender of small miners may ease some of the selling pressure on cryptocurrencies.
Bitcoin's hashrate continues to decline: 20% from historical highs
Bitcoin's hash power (hash rate) (representing the amount of calculations per second (TH / s) performed by the BTC blockchain) is often considered as an indicator of the strength of the basic network of cryptocurrencies.
In the past few weeks, its computing power has fallen sharply along with the price of Bitcoin, from a historical high of about 125 million TH / s in early March to the current level of about 100 million TH / s, a 20% drop.
The plunge coincided with BTC showing signs of technical weakness, and its recent sell-off has caused many smaller miners to shut down miners due to unprofitability.
Why is the decline in computing power good for BTC prices?
Although some people think that the decline in computing power is a symbol of the potential weakening of the network, this may actually indicate that Bitcoin is expected to rebound significantly in the near future.
One of the roles of miners in the crypto market is to provide stable selling pressure to the cryptocurrency market. They sell their mined BTC in fiat currency to provide funds to continue operating mining activities.
This is especially true for smaller mining companies, as large mining companies can continue to operate at unprofitable levels due to their large amount of capital.
When the price of bitcoin plummets so much that it can no longer profit from mining, many smaller operators will temporarily shut down the miners, while larger operators hold their own BTC, hoping for a better price Sell it for a profit.
Having said that, the decline in computing power may indicate that Bitcoin is about to see less selling pressure from miners, which has brought a huge rebound space.
Bitcoin hashrate numbers may also decline further in the short term, with the upcoming halving of block rewards and the current weak technology may make mining BTC even more unprofitable. As the selling pressure weakens, the space for Bitcoin to rebound will also increase.