Along with the sliding price of bitcoin - currently in the process of achieving new lows for the year near $5,000 - both the hashpower and mining difficulty on the Bitcoin network seem to have peaked. Both are now falling at rates which have become unusual for Bitcoin in 2018, even as prices have continued to shake out the rest of the market.
Looking at bitinfocharts’ yearly hashrate chart tells a story of a broad and powerful uptrend stopped in its tracks.
Bitcoin’s network began the year with about 16 exahash per second (Eh/s) worth of firepower, growing all year until reaching a high only weeks ago, of 60 Eh/s.
From that nearly 300% rise to 60 Eh/s rate, however, hashrate has dipped sharply to 42.7 Eh/s on November 16 (or even lower according to fork.lol), and looks to be in a shallow downtrend. This is most likely due to fiscal pressure put on miners, who may be turning off their rigs, unable to absorb losses incurred by the falling price of bitcoin.
An additional possibility for falling Bitcoin hashpower is that the Bitcoin Cash hardfork detracted hashpower from the Bitcoin network, as the competing sides of the Bitcoin Cash fork used resources previously dedicated to Bitcoin to support their respective sides of the fork.
Mining Difficulty Falling
It is not just hashrate that has been falling, but also subsequently mining difficulty. (The Bitcoin software adjusts its difficulty every 2016 blocks, which should take about two weeks if blocks are mined every ten minutes; if they are not, Bitcoin will adjust the difficulty up or down to hit ten minute block times.)
A fall in mining difficulty is quite a rare event on the Bitcoin network - it is most often rising along with rising hashpower. But of late it has been flat or falling. Since October 17 the difficulty has fallen and is now accelerating to the downside, from 7.45T to 6.65T.
CrytpoGlobe recently covered the importance of Bitcoin’s mining difficulty, and the historic role difficulty fluctuations have played in signalling market movements. In brief, extended periods of falling or flat mining difficulty could signal the bottom of dwindling markets, according to some analysts.
If the bitcoin price continues to plunge, a further drop in both hashpower and difficulty would not be surprising.