Bitcoin’s hashrate has returned to 241.29 EH/s after dropping by 30% last week. Extreme cold weather conditions leading up to Christmas had forced miners across the United States to halt operations to reduce strain on the nation’s electricity grid.
The network hashrate of the world’s most valuable cryptocurrency has returned to regular levels after plunging during the Christmas weekend due to freezing temperatures sweeping across the United States, which put a strain on the country’s power grid.
Thousands of homes and businesses in the country were left without electricity in the days leading up to Christmas amid an Arctic blast and winter storm that destroyed power lines with heavy winds and snow, and dropped temperatures to dangerously low levels. American news outlet CNN reported that the event led to 22 people losing their lives.
Bitcoin miners in Texas, the largest contributor to the country’s hashrate, voluntarily decided to halt operations to give power back to the national grid so that residents can keep their homes heated. Hasrate is a measure of how much computing power is being used to process and validate transactions on the Bitcoin network. According to data sourced by CoinMetrics, the mean hashrate dropped by more than 30% on December 24, from 230 exahashes per second (EH/s) to 155 EH/s. On Christmas day, the hasrate which typically hovers around 225-300 EH/s, fell to 170.60 EH/s.
“Please be prepared for some ups and downs this weekend as we deal with the winter storm. Because your miner is offline, people can heat their homes and cook,” said Neil Galloway, Director of operations at Compass Mining.
Miners across the country paused operations during the weekend after the National Weather Service (NWS) warned of extreme cold temperatures. Riot Blockchain and Core Scientific – which recently filed for bankruptcy, said they would be participating in “multiple power curtailments” to help stabilise the electrical grid. “BTC production is expected to decrease during this time”, said Core Scientific in a tweet.
On December 26, hashrate of the world’s largest cryptocurrency by market value returned to 241.29 EH/s, according to data from hashrate mining calculator CoinWarz. The events have led to certain Bitcoin maximalists suggesting that the fall in the crypto token’s hashrate was due to the network being highly centralised.
“If hashrate was distributed evenly around the world by tens of millions of small miners instead of a few dozen massive mines, this event would not have even registered on the network,” said John Stefanop, founder of Bitcoin mining machines manufacturer FutureBit.
Stefanop noted that a few large mines centred around Texas has cost the entire network, as the rate of Bitcoin transaction confirmations were 30% slower worldwide because of the hashrate not being centralised enough.
According to the Bitcoin Electricity Consumption Index of the Cambridge Centre for Alternative Finance, the United States accounts for the largest share of global hashrate at 37.84%. States with the most number of Bitcoin mining farms are Texas, New York, Kentucky and Georgia – all of which had to experience electricity outages during the Arctic Blast.
Affordable power and favourable regulations are what has attracted miners to Texas, which is now one of the largest Bitcoin mining hubs in the world. The lone star state is host to some of the largest mining companies in the world, including Riot Blockchain, Argo, Bitdeer, Compute North, Genesis Digital Assets and Core Scientific.
However, the recent weather events have only added more misery to Bitcoin miners who have been heavily impacted by this year’s bear markets. Recent data show underperforming markets have plagued mining companies to debts of at least $4 billion, causing many notable U.S based firms to file for bankruptcy in the recent months – Core Scientific and Greenridge.
The drop in network hash rate has not impacted the price of BTC, which at the time of writing is trading at $16,857 – up by 0.1% in the last 24-hours.