Why Does Mining Power Decrease (What’s Wrong with Low Mining Power)?

08/19/2023 09:20 • Crypto & Markets • 48 views

There are two reasons why mining power decreases and miners’ profits decline. First, it becomes increasingly difficult to mine certain cryptocurrencies. After the price of Bitcoin kept rising, some mining farms started shutting down their machines, while other cryptocurrencies experienced significant drops. This indicates that market participants are not optimistic about the price trend of Bitcoin, as they believe its increase is driven by mining power. If there is not enough power and sufficient cash flow to support it, these people may quickly exit the field. The second reason is the decline in mining power. All the bitcoins in the entire network have already been mined, and over time, the hash rate will gradually decrease, limiting the overall growth of the network’s total mining power. Therefore, the decrease in mining power is also a factor that leads to the difficulty adjustment in Bitcoin mining. Although the network transaction volume of Ethereum is relatively large at present, its decentralization and advantages such as smart contract mechanisms make it a very important infrastructure, and it is still in its early stages.

What’s Wrong with Low Mining Power

According to CCN, due to the decline in Bitcoin’s price to around $200 in May 2018 from its peak, underestimating mining power was inevitable. This situation began to change with the development of the mining industry and the increase in network capacity. However, according to data from CoinMetrics, so far, only about 5% of blockchain nodes are active (i.e., running hundreds of applications). If this number continues to grow, it will result in a decrease of 50% or more in the number of “miners.”

Additionally, because many users want to pay transaction fees with higher network performance than other cryptocurrencies, some users choose to work with less power. When the average mining power of a mining pool drops from 50TH/S to 30MH/S, it means they cannot afford their costs.

This article and pictures are from the Internet and do not represent qiAiAi's position. If you infringe, please contact us to delete:https://www.qiaiai.com/crypto/25194.html

It is strongly recommended that you study, review, analyze and verify the content independently, use the relevant data and content carefully, and bear all risks arising therefrom.

Why Does Mining Power Decrease (What’s Wrong with Low Mining Power)?

What’s Wrong with Low Mining Power

Related recommendations