Bitcoin’s hash rate falls as conflict in the Middle East drives up energy prices, adding pressure to the mining sector and the wider market.
The drop in the hash rate is likely tied to geopolitical tensions due to the war on Iran and the rise in oil prices, given that an estimated 8% to 10% of global bitcoin mining operates in energy markets that are sensitive to energy costs.
With the hash rate down about 8% over the past week to 920 EH/s, the network may be entering another phase of miner capitulation. Historically, such periods have coincided with downward pressure on bitcoin’s price, which is currently trading below $72,000, about 5% below Monday’s high.
As a result, the network is set for a downward difficulty adjustment of approximately 8%, which would mark the second largest negative shift in the past five years, according to mempool.space.
This drop follows one of the largest difficulty drops on record in mid-February, highlighting significant volatility in mining activity.
As a result of increasing competition, persistently low transaction fees and bitcoin price volatility, this has squeezed margins and pushed many listed miners to diversify into AI and high-performance computing, alongside increased bitcoin sales to support operations, acting as a headwind to the bitcoin price.
