The much-awaited Bitcoin halving has come and gone. The third Bitcoin halving was a success. Its implication has been a slashing of block rewards.
Prior to the halving, a miner was rewarded 12.5 BTC for every block discovered. Now, this stands at 6.25 BTC. This is set to discourage a few miners especially if the price of Bitcoin does not compensate for the drop in supply.
The latest data shows that miners are shutting down the mining equipment. Since the halving, there has been a 40% drop in hashrate. Arguably, just before the halving, this was at an all-time high with miners competing to grab as much as Bitcoin they could get while the reward was 12.5 BTC.
Prior to the halving, on average, miners were profiting as long as Bitcoin was above $7K. With the latest supply cut, many can only profit if Bitcoin is above $14K.
When and if Bitcoin reaches highs of $12K we expect hashrate to moon again.
It is, however, important to note here that this is dependant on a variety of things chief among which is the cost of electricity.
Post halving, there was an expectation that the hash rate would take a hit which would only be worsened by a price capitulation.
This has not been the case and Bitcoin has in fact been soaring with $10K beckoning. But some have been skeptical calling this a dead cat bounce.
It is possible that whales are setting up a bull trap for retail investors and as soon as Bitcoin tops, it crashes back down.
So with all the uncertainty going on, there is anxiety in the market. And with little to go buy over the market trend, any development could send Bitcoin violently either way. But one major thing is taking place, Bitcoin hashrate crashing.
What Bitcoin Hashrate Signals
In the face of it, it seems bearish, it shows weakness. Miners shutting down their gigs can mean more centralization and at extreme levels could lead to a weak network especially now that adoption is at an all-time high. But while this is negative, there are positives.
First, miners will need to adopt more efficient types of equipment which will result in a healthier network. It also means difficulty adjustments which normally lead to a price increase.
Those shutting down are the less efficient and small miners, their exit could bring better market stability ads big miners are stable in production and selling.
Bitcoin hashrate plummeting seems to be on a finer line on whether is bullish or bearish. Thus far, the bulls have seemingly been the winners.
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