Bitcoin: sharp and sudden drop in hashrate?

Today, there is a report suggesting a sharp and sudden drop in Bitcoin mining hashrate. The report is indeed true, but it has been disseminated with a clear excess of sensationalism. 

In fact, upon closer analysis, it is revealed that this is not an abnormal decline, but rather an entirely physiological drop.

To understand this dynamic, however, it is necessary to start with an important clarification.

Hashrate and Bitcoin Price

Many people believe that the market value of a BTC depends on its “production” cost (although it would be more accurate to use the term mining).

In reality, this is false for two reasons. 

The first is that, in reality, the exact opposite is true. It is not the selling price that depends on the extraction cost, but the extraction cost that is adjusted based on the market value. 

The cost of mining a BTC is not only not fixed, and not set in any way, but depends solely and exclusively on the arbitrary choices of the miners. 

Miners decide how much money to invest, and spend, in BTC mining based on how much they expect to earn from sales, therefore based on what the selling price is at that moment, and what they anticipate it might be in the near future.

The second reason is that miners now extract only 3.125 BTC per block, and at a rate of about one block every 10 minutes, they extract approximately 450 BTC per day. 

Assuming they sell them all, even though this is not actually true, a constant selling pressure of an additional 450 BTC per day is irrelevant compared to the over 2,000 BTC per day that have been collectively withdrawn from crypto exchanges in the last thirty days alone.

Therefore, the sale of BTC mined by miners is now considered a dynamic that is not capable of dominating the crypto markets except in rare exceptions. 

The Decline of Hashrate

Taking as a reference CoinWarz’s hourly estimates, the highest peak of the hashrate in the last thirty days was reached on December 8th, well over 1,360 eH/s. 

That day the price of BTC had climbed back above $92,000 after having dropped below $89,000 the previous day. 

As recently as Saturday the 13th, the hashrate was above 1,200 eH/s, but today it hit a low peak even below 880. 

Technically, it would be a 26% drop in less than 48 hours, but although this figure might seem dramatic, in reality, it is absolutely physiological. 

First of all, it should be noted that today’s minimum peak is higher than that of December 5th, when the estimated hashrate dropped below 860 eH/s. 

Furthermore, it is important to specify that since Friday, the price of Bitcoin has dropped from $92,500 to $88,000. As usual, it is the market value that has influenced the miners’ decisions, and consequently the hashrate used for BTC mining, not the other way around. 

No Problem

Additionally, it should be noted that the measurement of Bitcoin’s hashrate is actually based solely on an indirect estimate, so the hourly data is somewhat unreliable. 

For instance, it’s much better to use the seven-day moving averages from Hashrate Index. 

The current value, which also includes the drop in hashrate over the past two days, stands just below 1,100 eH/s. It is important to reiterate that this is the seven-day moving average of estimates made based on the blocktime of each individual block. 

Well, on December 5th, when the previous weekly low peak was reached, this value had dropped to 1.030 eH/s, which is even lower, albeit slightly. 

In fact, if we go back in time to shortly after mid-October, when the all-time peak of the seven-day moving average of Bitcoin’s hashrate was reached (1.157 eH/s), the decline reduces to an insignificant -9%, which is significantly lower than the -16% recorded by the price of BTC in the same period.

Moreover, the current level of hashrate is still significantly higher compared to early September, when the price of BTC was above $110,000. 

The Temporal Discrepancy of Bitcoin’s Hashrate

There is another dynamic related to Bitcoin’s hashrate that often eludes many. 

The hashrate increases as the market value of BTC rises, and vice versa.

However, significantly increasing the hashrate takes a considerable amount of time. 

Indeed, first of all, it is necessary to secure the funds to finance the purchase of new machines. Then, they must be ordered and one must wait for their delivery, which often can take several months. Finally, they need to be installed and configured.

As a result, when the price rises (which can happen very quickly), it does lead to an increase in hashrate, but over much longer timeframes. 

For example, when the price of BTC skyrocketed from $70,000 to over $100,000 within a few weeks, following Donald Trump’s electoral victory, Bitcoin’s hashrate took a full three months to rise from just under 750 eH/s to 835 eH/s.

Moreover, the rise continued even as the price in the early months of 2025 was descending back towards $80,000, precisely because these are two dynamics with very different timings.

This also applies when the price drops, although in this case reducing the hashrate is much simpler: just turn off the less efficient machines, namely those that, for the same amount of BTC mined, incur higher costs.