In the past two weeks, Bitcoin’s average hashrate has fallen 14% from its all-time high in mid-November.
This is revealed by Hashrate Index, which says the weekly average has fallen from 274 EH/s on 12 November to 236 Eh/s yesterday.
Bitcoin's hashrate is dropping like a rock↘️
Bitcoin's 7-day average hashrate is currently 236 EH/s, a 14% decrease from its 274 EH/s ATH👀
— Hashrate Index (@hashrateindex) November 28, 2022
Bitcoin’s hashrate calculation
These data are not precise readings, but estimates calculated based on several factors, including difficulty and block-time. This is why different sources have different data.
In the case of the Hashrate Index, these are weekly averages, which are the averages of the daily hashrate estimates for the previous seven days.
For example, according to bitinfocharts.com, the daily average for yesterday was 244 Eh/s, which is higher than the 236 Eh/s estimated by the Hashrate Index in terms of the daily average of the last seven days.
On the other hand, according to bitinfocharts.com the day before yesterday the daily average dropped as low as 204 Eh/s, so the daily average of the last seven days does not deviate much from that of the Hashrate Index.
Indeed, since the daily averages vary quite a bit, while the weekly average varies much less, the latter is probably better suited for analyzing hashrate trends over the medium term.
Instead, according to CoinWarz, today it touched a high hourly peak of almost 290 Eh/s, while three days ago it touched a low hourly peak of 195 Eh/s.
What is certain is that the absolute all-time high was reached on Saturday, 12 November, when the daily average touched close to 300 Eh/s for the first time in history, and the hourly average even rose above 340 Eh/s.
The trend in recent weeks of the Bitcoin hashrate
To properly frame the decline of the last two weeks it is also necessary to look at the previous weeks.
At the end of October, the seven-day daily average was at about 260 Eh/s, then rose to 274 already in early November. It remained high until the very peak on 12 November, which was a couple of days after the collapse of BTC’s value due to the FTX bankruptcy.
On 20 November there was a small increase in difficulty that made Bitcoin mining a little less profitable, and coupled with the fact that its market value dropped, some miners probably started shutting down some machines.
At this point, the next change in difficulty, scheduled for early December, may be down.
No problems for Bitcoin
So far these dynamics have not caused any operational problems for Bitcoin.
In fact, block-time, which is the average time it takes to mine a block, has remained around 10 minutes, although it has been consistently above this threshold since 21 November.
For this reason, it is very likely that the next adjustment of the difficulty will be downward, so as to bring the block-time back close to 10 minutes.
By contrast, in past weeks, thanks to the high hashrate, it was almost always below this threshold, with a minimum peak below 8 minutes in early October. The highest peak these days was above 13 minutes on 26 November, which is when there was the lowest hashrate peak in recent weeks.
It is worth mentioning that although Bitcoin is not having any problems operating, some problems are being experienced by the miners.
In fact, with BTC prices so low they are cashing in way too little to meet all their expenses. The estimated profitability of BTC mining is at its lowest this cycle, with a peak at only $0.0525 per THash/s per day touched on 14 November.
In such a situation it is more than fair to expect that if the price of Bitcoin continues to be this low, miners will be forced to shut down more and more machines, reducing the hashrate even further.
In that case, there should be no problem for Bitcoin, as long as the difficulty goes down at the same rate. The fact is that although it is inevitable that difficulty will drop as hashrate decreases, difficulty adjustments only happen every two weeks or so, so in the event that there is a further drop in the price of BTC in the days just after the next adjustment, it could be a problem for the miners.
In that case, the block-time could remain well above 10 minutes for a few days until the new difficulty adjustment.
It is not surprising that there are a number of Bitcoin industrial mining companies currently experiencing difficulties.
Should such low prices for BTC continue, these difficulties in some cases could become unsustainable, forcing some of these companies to close.
However, even if this happens, the difficulty adjustment will continue to make the Bitcoin protocol work properly, although there may be some delays in validating blocks before the next adjustment.