Bitcoin’s hash rate is falling as the Middle East conflict drives up energy prices, adding pressure to the mining sector and the broader market.
The drop in hash rate is likely linked to geopolitical tensions due to the war with Iran and rising oil prices, given that an estimated 8% to 10% of global bitcoin mining operates in energy markets sensitive to energy costs.
With the hash rate dropping roughly 8% over the past week to 920 EH/s, the network may be entering another phase of miner capitulation. Historically, those periods have coincided with downward pressure on the price of bitcoin, which is currently trading below $72,000, about 5% below its Monday high.
As a result, the network is set for a downward difficulty adjustment of approximately 8%, which would mark the second largest negative change in the last five years, according to mempool.space.
This decline follows one of the largest difficulty drops recorded in mid-February, highlighting significant volatility in mining activity.
As a result of increasing competition, persistently low transaction fees, and bitcoin price volatility, this has squeezed margins and pushed many publicly traded miners to diversify into artificial intelligence and high-performance computing, along with increased bitcoin sales to support operations, acting as a headwind for the bitcoin price.
