On September 23rd, the Bitcoin network’s hash rate suddenly fell by a significant amount. In addition to this, the price of Bitcoin has since fallen in the wake of this drop. As the dust has now begun to settle, some reasons as to Bitcoin’s price drop have become evident.
Bitcoin falls to nearly $8,000
At the time of writing, Bitcoin is trading at a price of $8,414. Moreover, this comes just days after Bitcoin’s price was circling the $10,000 price line. As such, this represents a massive drop in the price of Bitcoin during a short period of time.
Specifically, the Bitcoin network preceded this drop with its own drop in the Bitcoin network hash rate. To put things into perspective, the hash rate fell from around 98,000,000 TH/s to merely 57,700,000 TH/s.
This came around a week after a record high hash rate, which reached over 102,840,000 back on September 18th. At the time, the rising hash rate was linked by some to imminent price increases in the price of Bitcoin.
Could the reason be a turndown in Bitcoin mining?
It would now seem that the fall in the hash rate, on the other hand, could have led to the massive drop in Bitcoin’s price. According to Cointelegraph, on the other hand, it is speculated that a recent turndown in Bitcoin mining could have led to this. The following comment was made by a Cointelegraph reader called “Jeff Brandt”:
“The next [difficulty] increase in 2 days will push previous gen S9s (roughly 50% of the network) below profitability. Last week an unrestricted firmware for S9s was posted and every large farm operator is working at a feverish pace to get approximately 3 million machines updated. The new firmware has optimizations that squeeze the very last bit of efficiency out of the S9 lowering the watts/thash-sec from 96W to ~80W. Some machines can perform with no degradation to speed, while older machines must drop performance by ~30% to achieve the same results.”
Nevertheless, there is also other speculation as to the reason of Bitcoin’s sudden reversal in price. According to the digital asset managing firm CoinShares’ Head of Research, Christopher Bendiksen, this could be the result of a “statistical relic”.
“PSA: #bitcoin hash rate is not a known measure. It can only be estimated from previous block intervals. Block times are Poisson distributed which sometimes causes large variance in block intervals. If several slow blocks happen in a row, it makes these estimates spike down.”
As such, it remains to see how the price of Bitcoin continues to develop. Furthermore, some more time may reveal the exact reason behind Bitcoin’s price drop. On the other hand, it is also possible that the price drop was the result of an interplay of all these factors.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.