There are always interesting things going on in the cryptocurrency world. Not all of those developments make sense, particularly where Bitcoin is concerned. its hashrate dropped by a quarter in very quick succession, yet no one knows why that is exactly. It does pose somewhat of a network risk, although it is widely believed this will be a blip on the radar when everything is said and done.
The BTC Hashrate Drop
When one looks at the Bitcoin hashrate chart, there is a strong and outspoken upward trend visible. The number of people mining Bitcoin, as well as the hardware units used to do so, have all evolved over the past few years. This results in a very sharp increase in overall hashpower, which is a strong sign. A higher hashrate usually indicates the network is more secure. One would expect nothing less from the world’s leading cryptocurrency.
When that hashpower suddenly decreases for no real reason, there is a genuine reason for concern. After hitting roughly 97 exohash per second, the network suddenly dipped to 68 exohash. It is possible that one of the bigger Bitcoin mining farms was offline for a while and is now slowly bringing everything back online. It is also possible the recent hashrate spike was a mere test by one of the ASIC manufacturers to see if their design would hold up under pressure. No one knows exactly what is going on, yet a dip of this magnitude is very worrisome, for obvious reasons.
A Problem Highlighted
Incidents like these will always spark some heated debates. Especially where Bitcoin’s network security is concerned. This steep drop-off is very problematic in that regard. One would expect payment processors to increase the number of network confirmations needed until the hashrate stabilizes again. At the same time, it seems unlikely anyone would send a ton of money to obtain 30 exohashes worth of mining power to potentially attack the Bitcoin network – and possibly still fail.
That being said, this development raises one interesting question. Similar to a lot of alternative currencies, Bitcoin relies on proof-of-work as its algorithm choice. That situation may need some rethinking for the future, especially if issues like there were to repeat themselves in the coming months. Even so, it seems unlikely that Bitcoin would ever switch to proof-of-stake, or something along those lines. However, a more sustainable solution would not necessarily be a bad thing, as relying on SHA-256 mining might not be the best course of action either.
Bitcoin Price Correlation?
It is evident that a lot of things are going wrong for Bitcoin in the past few days. Not only is the hashrate dropping for no apparent reason, but the price per BTC is also on a slippery slope. With a near $1,000 drop in the past few days, one has to wonder if these two strange developments are somehow correlated. Miners need a certain price per BTC to net a profit, and it is certainly possible one of the bigger operations has called it quits. For now, it seems both incidents are unrelated, albeit things may become clearer in the days ahead.