Bitcoin (BTC) mining activity doesn’t seem to be reacting to the recent price rally that took the asset from approximately $9,000 in early July to almost $12,000 at time of publication.
According to data from Coinmetrics, hashrate spiked around July 7 and has remained largely flat amid fluctuations to the downside.
Bitcoin Hashrate (green) vs. Difficulty (red), 7-day average. Source: Coinmetrics
The hashrate represents the sum total of all miners attempting to find hashes that would create new valid blocks. There is generally a strong correlation between hashrate and price, as a higher BTC value increases the profit margins for each individual miner.
Since July, hashrate growth appears to have slowed down as the difficulty saw its first decline since early June. The trough in hashrate in mid-July, right after a significant difficulty increase, suggests that the balancing mechanism overshot. Difficulty was set too high for the available hashrate, slowing down block production.
While for most of July Bitcoin’s price remained steady, it crept up until a dramatic rally took it to highs of $11,500 in the second half of the month. Hashrate is sitting below all-time highs even as two weeks passed since the major leg of the rally.
During protracted rallies, hashrate tends to trail price as the supply of new miners is constrained by physical supply chains. However, the industry is currently experiencing additional disruptions stemming from the power struggle at Bitmain.
As Cointelegraph reported previously, shipments of new mining devices are being halted for at least three months.
News of the disruption broke amidst the ongoing struggle for company dominance between Bitmain’s two co-founders, Jihan Wu and Micree Zhan. Bitmain is one of the biggest manufacturers of ASIC devices, though competitors like MicroBT have been hot on their tail since the start of 2020.
As delivery of new devices is halted, a significant chunk of the ASIC supply is being restricted. At the same time, the rally rendered the old S9 series of miners slightly profitable at electricity prices of $0.04, according to Asicminervalue.
As Bitmain competitors scale their operations up and old miners are gradually turned back on, it is likely that the hashrate will resume growth.