Bitcoin Hash Rate Slowed Down: How Does This Relate To Struggles Inside Bitmain?
Paradoxically, the soaring Bitcoin price did not act as a catalyst for the network’s hash rate to rise. Why is the “oil on the fire” adding to the conflict inside Bitmain, and how the struggle between the founders of the company can affect crypto mining in general?
Bitcoin hash rate
While Bitcoin is on the wave of success and moving to new price highs, the mining of the flagship cryptocurrency has partially “sunk”. It would seem that with an increase in the price of Bitcoin, the hash rate should increase because miners are now especially interested in generating new blocks. The rise in the price of Bitcoin from $9,000 to $12,000 was supposed to be the catalyst for the increase in the hash rate of Bitcoins, but the figures have remained practically unchanged.
Coinmetrics published a report according to which the hash rates of the Bitcoin network were at their peak in early July 2020, after overcoming the so-called phase of “clearing the ecosystem” of the network of weak and ineffective miners. For a month, the hash rate has slowed down, and the power of the blockchain network has not approached the level that was recorded before the third Bitcoin halving in May 2020.
Technical experts believe that one of the reasons for the slowdown in hashing speed is the increase in mining difficulty. The increase in the time to generate new blocks, increased competition between large mining companies have called into question the profitability of mining as a business.
Why did the conflict at Bitmain affect the Bitcoin hash rate?
Analysts also see the negative impact of an external factor in the decrease in the hash rate of the Bitcoin network in the form of a struggle for leadership within Bitmain. A conflict in a mining equipment company has flared up between its two founders, Jihan Wu and Micree Zhang, and has already entered the stage of legal claims.
Wu has been accused of stealing more than 10,000 Bitcoin mining machines but denies the claim entirely. The scandal over Wu’s recent firing as SEO of the company also adds fuel to the fire.
The internal struggle negatively affected the production of equipment: Bitmain officially announced that it would “freeze” the supply of mining equipment until at least October 2020. As a result, some mining companies have found themselves in limbo and so far cannot continue the race to generate Bitcoin using the new hardware from Bitmain.
Despite the “freeze” in the supply of equipment from Bitmain, experts hope that the company’s competitors will take advantage of this situation to implement their ASIC devices, and, as a result, the Bitcoin hash rate will recover.