- Bitcoin hash rates have dropped by a significant amount.
- The decline coincides with the harsh weather conditions in Texas.
- Texas-based mining pools are freeing up energy to strengthen the local grid.
Bitcoin has been hogging the headlines lately, mainly thanks to the rising interest in ETFs and subsequent market rallies. Yet, beneath the surface of its remarkable performance, a worrying trend is shaping up for its security as the network’s hash rate slowly spirals ahead of the highly anticipated ‘halving’ event.
Texas’ Extreme Cold Weather Hits Bitcoin Hashrate
Bitcoin’s hash rate has declined by approximately 25% since Monday, January 15, brewing concerns for the network’s security. According to data from MiningPoolStats, the network’s hash rate plummeted from 600 exahashes per second (EH/s) on Sunday to as low as 425 EH/s on Tuesday. At press time, the network’s hash rate stood at 476 EH/s.
The driving force behind this plunge? Extreme cold weather in Texas.
The dip in Bitcoin’s hash rate coincides with a weather warning issued by ERCOT between January 14 and January 17 due to extreme cold weather across Texas. Mining companies in the region were required to curtail power to strengthen the local grid during the freezing weather. MinerMag reports that Texas-based mining companies trimmed four gigawatts of power capacity, leading to a significant drop.
Texas, renowned for its affordable electricity, holds a prominent position as one of the major mining hubs for Bitcoin. The region hosts some of the largest mining companies in the United States, such as Foundry USA Pool and Luxor Mining Pool.
Following the extreme cold weather warning, Foundry USA Pool, contributing 26.5% to Bitcoin’s overall known hash rate, experienced a real-time hash rate decline from an estimated 155 EH/s to 77 EH/s.
On the Flipside
- On January 17, Bitcoin miners sold 10,000 BTC, worth $450 million, the largest daily decline in miner reserves in over a year.
- Bitcoin miner reserves are at their lowest levels since July 2021 at 1.83 million coins or approximately $78 billion.
Why This Matters
Bitcoin mining companies adjusting their operations to prioritize supporting the regional power grid and residents during severe cold conditions is a major development for the industry. It proves miners serve as a base load that can provide energy for others during crises.
Read more about the IRS’ relaxed stance on crypto tax:
New IRS Crypto Tax Stance Positively Surprises Businesses
Is a market crash looming on the horizon?:
Bitcoin, Ethereum, and XRP Flash On-Chain Warning Signs