On-chain data shows the 7-day average value of the Bitcoin Hashrate has crashed by more than 9% since its all-time high (ATH).
When the value of the Hashrate rises, it means new miners are joining the network and/or old ones are expanding their facilities. Such a trend implies the network is looking profitable to these chain validators.
On the other hand, the metric going down suggests some miners have decided to unplug their machines from the chain, potentially because they are no longer able to break even.
As displayed in the above graph, the 7-day average Bitcoin Hashrate set a new ATH of 942.6 EH/s back at the start of the month. Since then, however, the indicator has faced a steep drop and its value is almost back at the low from mid-May.
This indicator automatically changes in value about every two weeks and how it will change is dependent on the activity of the miners themselves. Satoshi wrote in a simple rule for the network to follow: the block time must remain constant at 10 minutes.
Whenever the miners take longer than this period to mine blocks on average, the chain reduces its Difficulty in the next adjustment to help get miners back up to speed. Similarly, them being faster forces the network to make mining harder.
The Hashrate increase earlier meant that the miners became too fast at their task (thanks to the additional power), so the chain responded by taking the Difficulty to a record value.
The Difficulty increase to the ATH may have priced out miners who were already on the edge, hence why the Hashrate observed a plummet. Another contributing factor could be the price action. Although the price has rebounded now, it very much showed a bearish trajectory last week.
Generally, sharp declines in the metric indicate a worsening of sentiment among the miners. It still remains to be seen, however, whether this latest decline reflects a real shift. The Hashrate has shown this pattern of an ATH followed by a rapid decrease a couple of times already in the last two months.
Bitcoin has managed to recover beyond the $108,500 mark following a daily jump of 2%.
