A recent article published by Bitcoin.com reflected on the drastic drop in BTC mining hash power from all-time highs in the weeks leading up to February 17.
It is worth pointing out that the years-long claim that hash power leading price is incorrect. The profitability calculation that every miner must go through is a complex one and one must take into account their own economic costs, access to liquidity, and also access to insider knowledge.
If we are to overlay a chart of hash power and price, (with the difficulty period in the middle), there are clearly times when the price leads the hash power, such as at point A, where a downtrend in prices lead to lower average hash rates in the same period between A and C. Furthermore, as seen in the D region, a lowering of the difficulty, which normally sees an increase in hash power actually saw a decrease in hash power for the first couple days of March 4-6. There seems to be little to any conclusions that one can draw simply by looking at the charts. But one thing is clear: both hash power and BTC price keep going up over time. But why?
While it is certainly the case that some miners may be micromanaging their hash power on a daily basis in order to maximize their returns, there are just too many competing factors that affect the profitability calculation to make any claims of price always leading hash power or vice-versa. For instance, one factor that is often overlooked is the 100-block rule, which…
