What is Hash Rate? Explaining the background of the BTC network decreasing by 12% since November

According to Coin Bureau reports, since mid-November, the Bitcoin network hash rate has decreased by approximately 12%. This is the largest decline since October 2021. Let’s delve into what hash rate actually is and why such a change has occurred.

Basic Concept of Hash Rate — The “Heart” of Blockchain Mining

Hash rate, simply put, indicates the processing power of the Bitcoin network. It represents the total number of calculations miners can perform per second, typically expressed in TH/s (terahashes per second). A higher hash rate means the network is more stable and block verification proceeds smoothly.

Hash rate plays a frontline role in maintaining blockchain security. The higher the miners’ computational power, the more difficult it becomes for malicious actors to take control of the network, thereby enhancing overall security.

Sudden Change in the BTC Network — Significant Drop Since 2021

Since November 11, the Bitcoin network hash rate has shown a notable decline of 12%. This drop is the largest since the large-scale mining restrictions in China in October 2021. Several factors may be involved in this rapid decrease, including adjustments in mining difficulty, electricity costs, and strategic decisions by miners.

Such changes serve as important signals indicating fluctuations in the mining environment and shifts in miner sentiment. Especially, the expansion or contraction of large-scale mining operations can significantly impact the overall hash rate, making it a key indicator for market participants to monitor.

Impact of Hash Rate Decline on the Market

A decrease in hash rate initially means reduced profitability for miners. On the other hand, in the long term, a decline in the number of miners could pose risks to network security. However, Bitcoin’s network is still supported by vast computational power worldwide, and a 12% decrease does not pose a serious security concern at this stage.

Rather, such fluctuations in hash rate are evidence that the network’s self-adjusting mechanism is functioning properly. Future hash rate trends will continue to be an important indicator reflecting the balance between Bitcoin’s price and mining profitability.