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Bitcoin hash rate is declining due to rising energy prices
The decline in hash rate and the associated pressure on miners may signal the beginning of a new phase of массовый exit of participants from the market (capitulation), which could lead to further price declines.
Bitcoin’s hash rate is decreasing amid the conflict in the Middle East, which is driving up energy prices. This increases pressure on the mining sector and the market as a whole.
The decline in hash rate is likely related to geopolitical tensions due to the war with Iran and rising oil prices. It is estimated that 8% to 10% of global Bitcoin mining is concentrated in regions sensitive to changes in energy costs.
Over the past week, the hash rate has dropped by approximately 8% to 920 EH/s. The network may be entering another phase of mass capacity reduction by miners. Historically, such periods have coincided with declines in Bitcoin’s price, which is currently trading below $72,000, about 5% below Monday’s high.
As a result, the network is expected to see a downward adjustment in mining difficulty of about 8%, which would be the second-largest negative change in the past five years, according to mempool.space.
This decline follows one of the largest drops in difficulty in history, recorded in mid-February, demonstrating significant instability in mining activity.
Due to increasing competition, consistently low transaction fees, and Bitcoin price volatility, miners’ margins are shrinking. Many publicly traded mining companies are forced to diversify their business by shifting toward artificial intelligence and high-performance computing sectors. In addition, to sustain operations, they are increasing Bitcoin sales, which creates additional pressure on its price.
See also: "Bitcoin mining is no longer profitable: what to do for those who cannot pivot to AI"
