The price of the pioneering cryptocurrency has fallen by 20% over the past seven days. There are more than 220 blocks to mine and 185,000 transactions to confirm.
Bitcoin’s price recently underwent a significant correction, which led to “red” numbers in the cryptocurrency market for the second time in a week. The crypto asset was trading below USD 50,000, a price not seen for almost two months.
The crash in the network’s hash rate has increasingly evident consequences in the market. There are high fees to validate transactions, delays in the mining of blocks, and a lack of readjustment in the mining difficulty. These factors are negatively affecting the trading of the main cryptocurrency on the market.
Power outages in the province of Xinjiang, in China, led to the departure of miners, which is now taking its toll. Data from Coinwarz indicates that the network’s hash rate was 208 EH/s, a record high figure, on April 15th. However, the collective computing power dropped by more than 40% to 109 EH/s only two days later.
At that moment, Bitcoin’s price went from above USD 63,000 to around USD 51,000. The recent drop reached a bottom at USD 47,700, that is, a 20% fall over the past seven days, according to CoinMarketCap. Concerning the hash rate for the second stumbling block, the figure went from around 181 EH/s to 155 EH/s.
Users Are Powerless When the Bitcoin Network Is Blocked
There is a chain effect, not only in the markets, when the Bitcoin network “suffers”. Millions of its users have also experienced a change in their perception. This especially happens among those who have adopted the cryptocurrency during the bullish cycle.
It would not be attractive to use a blocked network that takes days to process a transaction due to the loss of its computing power. On the contrary, users could lose interest in trading BTC and would be forced to migrate to altcoins. For example, it would be illogical for someone trading Bitcoin to send a USD 30 transaction if he had to pay USD 20 in fees.
Given the lack of certainty on how many days the slow processing of transactions could take, the problem becomes worse. Besides, those wishing to exchange BTC for altcoins must also conduct a transaction to acquire an equivalent of another currency. In other words, they have to make their transfers to an exchange, which translates into more fee payments.
According to data from mempool.space, the current blocking accounts for over 185,000 pending transactions to confirm and over 220 blocks to mine. At the time of writing this article, the fee to process a simple but high-priority transaction is 164 sat/vB, equivalent to around USD 11.5. The same transaction cost USD 20 before the market crashed on April 23rd.
The Hash Rate Is an Indicator of Bitcoin’s Value
Cryptocurrency entrepreneur Hans Hauge compared in July 2018 how the market capitalization of BTC correlated with the hash rate.
The parameter related to processing power was the one with the highest predictive power, according to the researcher. He also mentioned that other methods tested included the number of unique addresses and total transactions on the Bitcoin network.
By Alexander Salazar
