The significant drop in the price of Bitcoin has been followed by a rapid drop in mining hash rate in the Bitcoin ecosystem. Despite the subsequent price recovery and consolidation of above USD 6000, the hash rate continued to decrease and now is down to 95 EH/s from a peak of close to 120 EH/s just a few days ago.
The next difficulty reset will take place in a little over a day from today (March 24th, 2020). The difficulty is also projected to significantly decrease - down 13.25% as of this moment of writing to 14.36 T.
What are the possible implications:
1. Small miners and older equipment are being squeezed out of the market. I have already shut down my Innosilicon T2T 30 TH miner. It is already more expensive for me to buy than to mine. Only large mining facilities with access t cheap electricity can survive and remain. This development further exacerbates the debate on centralizing the Bitcoin ecosystem. Like a game of monopoly, mining in Bitcoin has become a game of survival of the fittest and my opinion remains that such centralization may ultimately defeat the purpose of Bitcoin.
2. Halving is fast approaching - using efficient markets theory, the event should already be priced. If the current price is the verdict than we are likely as a community to have started giving hope away. Crypto adoption is stagnating and the valuation case is weakened. The rush for good old cash in troubled times put a question mark over the "safe haven status" of Bitcoin.
3. Seeking a correlation between the increase in hash rate and increase in difficulty level and Bitcoin price expectations may show that we are in a longer-term price stagnation. While the relationship between cause and effect is not always clear, it is quite certain that price and hash rate always move together one anticipating the other regardless of order.
Overall confidence seems to be down and rebound is not yet in sight.
I would be greatly interested to see different points of view in the comments section. Thank you!
