Figures show BTC miners have stepped up their activity in recent months, while the ETH hashrate has dropped along with the coin’s price.
The cryptocurrency market has seen a more than 70% drop in valuation since its December 2017 peak. Although led by a massive correction in the Bitcoin (BTC) price, the downtrend has not affected miners’ interest in the original cryptocurrency. On the contrary, the BTC mining hashrate surging in recent months, according to new market research data. Figures also show that Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is experiencing a steep decline in mining activity, raising concerns about the network’s future.
BTC hashrate doubles since May
Sam Doctor, a quantitative strategist at market research firm Fundstrat Advisors, said in a Twitter post on Friday that the Bitcoin network’s hashrate had almost doubled since May, from 28 EH/s [quintillion hashes per second] to 57 EH/s.
Doctor’s analysis also showed that the break-even cost of mining one BTC is now $7,300 compared to $6,000 in May. This calculation includes the depreciation costs of mining equipment and suggests the “fair price” of Bitcoin. Given this information, the cost of mining one BTC is roughly 12% higher than the coin’s current price of around $6,300.
Mining Bitcoin and other cryptocurrencies requires hash power, which measures the difficulty of finding new blocks and mining the coin. If more people are mining Bitcoin, the hashrate (and therefore difficulty level) increases, and vice-versa. The increased level of mining may be coming from optimized ASIC rigs, as well as new farms coming online.
The high hashrate is a positive indicator, as it means that the cryptocurrency blockchain network is stronger and more resilient to attacks. The increased mining difficulty, especially amid bearish crypto market sentiment, also indicates the miners’ belief that BTC will appreciate in the future. However, it is hard to estimate whether miners are selling immediately to cover costs, or stockpiling coins.
ETH Hashrate Plunges 20% in the past month
And while miners’ willingness to continue mining Bitcoin despite its price drop seems undeterred, and even more robust, the Ethereum network is suffering a massive drop in its hashrate.
According to data from etherscan.io, the ETH hashrate plunged 20% in the past month, from 294 TH/s to 246 TH/s. Bringing the cryptocurrency’s mining activity back to its February levels, the decline is the biggest in the past year and perhaps even since the coin’s inception in 2015.
The Ethereum network exhibited a series of troubles in recent weeks, weighing on the digital asset’s valuation. In the past month, the ETH price fell from around $400 to a low of $167 before inching up to its current level of around $200. The sliding price may be the reason for miners shifting away from the network, as they are reaching the cost of production floor.
And while there were recently some suggestions that efficient ASICs have been developed for ETH, the hashrate data does not back the rumors. The Fundstrat figures presented above show that in Bitcoin, where a number of new efficient ASICs have been showcased, the hashrate has been jumping despite the coin’s price drop.