In November 2022, the first week was full of surprises and major upsets for the entire cryptocurrency industry. It wasn’t just the major cryptocurrencies but every altcoin felt the impact of the FTX crash.
Since then, the cryptocurrency industry has been struggling to recover. Still, things are not recovering the way the analysts and market observers have expected.
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Pre-FTX Crash BTC Performance
Bitcoin was demonstrating a strong performance before the FTX crash took place. Its trading value was over the $20,000 mark and it was on the right track to hitting $23,000.
On November 7, the entire cryptocurrency industry was shocked to see that the FTX exchange had made the headlines, being exposed by an anonymous whistleblower.
The balance sheet of the FTX exchange showed it was backing the FTX Token at Alameda Research from the funds held by the FTX users.
The news sent ripples across the crypto-verse and investors started to pull out from their investments in the platform. FTX exchange started to face major liquidity issues and halted the withdrawal option.
Soon after pausing the withdrawals, the exchange announced it had filed for Chapter 11 bankruptcy. Since then, the crypto industry has continued facing a downtrend and has fallen to an unrecoverable point.
BTC’s Hashrate Situation
Before the FTX exchange blowout took place, the hashrate for Bitcoin was recording strong figures. At that time, the hashrate for Bitcoin was hovering around 270 and 290 EH/s.
However, the situation changed for Bitcoin’s hashrate after the FTX incident. Even after a few days after the incident, the hashrate for Bitcoin was doing extremely well.
On November 12, the hashrate for Bitcoin hit an all-time high when it surged to 347.16 EH/s. Unfortunately, the situation hasn’t been the same since then.
After November 13, the hashrate for Bitcoin has continued falling in the negative direction. The report shows that by November 26, the hashrate recorded for BTC is down to 200 EH/s.
The current situation of the hashrate is a bit better than being at 200 EH/s. After falling to a low level on November 26, the hashrate has picked up a bit but it is still not enough for the Bitcoin miners.
At present, the hashrate recorded for Bitcoin is 236 EH/s, which is a slight improvement for the asset.
Reason behind the Declining Hashrate
With the hashrate declining for Bitcoin, there is only one thing that is being indicated, the miners are losing money. With the price of Bitcoin going down to an alarming level, it has become a bad gig.
The companies who entered the Bitcoin mining segment did it to make money with the price of Bitcoin rising tremendously. In such a short amount of time, the value of Bitcoin rose from the early $20s to the mid $60s.
However, the crypto market took a bad turn by the end of 2022 and so did Bitcoin. Since then, the value of Bitcoin has continued falling and the asset’s mining has become less profitable.
The firms that once generate income from Bitcoin mining are finding their businesses going into losses. Therefore, the companies have no choice but to shut down their business and look for other opportunities.
With the mining centers going out of business and getting decommissioned, it is obvious that the mining power would lose its momentum.
As the mining power goes down, the hashrate for Bitcoin mining would plunge tremendously. This is exactly what is going on with hashrate at the moment.
Positive Sign for Surviving Mining Firms
Although it is currently a negative trend for mining firms, the centers that survive the cold weather will be looking at profits in the long run.
This is because with the hashrate going down, the mining difficulty has also started moving in the negative direction. The mining difficulty is expected to plunge at the highest rate on December 5.
At the time of writing, the estimated cost of bitcoin production ($16,956) is awfully close to the leading crypto asset’s spot market value ($16,897). Previously, the cost of bitcoin production was $18,313 on Nov. 30, which was significantly higher than BTC’s spot market value. With a drop in BTC production costs, it makes it easier for current operators to survive.
Bitcoin miners are also expecting a large mining difficulty reduction between 6.56% to 7.9% lower than today’s difficulty rating on or around Dec. 5, 2022. Presently, the estimated mining difficulty reduction could be the largest difficulty drop the network has seen in 2022. Since Nov. 30, up until Dec. 2, 2022, roughly 80 exahash of hashpower has been removed from the network’s total hashrate.