Data collected by the Cambridge Bitcoin Energy Consumption Index shows that nearly a quarter of bitcoin’s global hash rate is powered by cryptocurrency miners in Xinjiang. Almost immediately after that point, the network hash rate started to spiral downwards.
Meanwhile, a great number of people have said that the price dump is correlated with the hash rate plunge. The director of research at The Block Crypto, Larry Cermak disagrees the blame can be cast so easily on the loss of hash power. “LOL, if you think the hash rate drop was the reason for the dump you’re name,” Cermak said in response to Willy Woo’s tweet (pictured above).
A power outage in the Xinjiang region of China where a significant portion of Bitcoin mining takes place caused a very sudden dip in the global hash rate which, in turn, caused transactions to back up and fees to rocket temporarily.
In mid-day trading Monday, Bitcoin changed hands at $54,578.94, a 4.68% gain from Sunday's low. This may have led some people to sell, though doing so probably was unwarranted. The power outage does expose a fundamental weakness: that although the Bitcoin network is decentralized, the mining of it is not.
As Bitcoin (CRYPTO: BTC) plunged by about 9% of its value over the last 24 hours, experts suggest that news of a power outage in China may be to blame. For those looking for some explanation, corrections are natural after massive run-ups. Weekends with low liquidity are perfect, some dumb catalyst to spook traders off, and down we go.
The cryptocurrency is up 90.13% for the year, CoinDesk reported. This reduces the number of coins available to new investors or those seeking to expand their holdings and should, in theory, smooth out wild price swings.