Frostbite In Texas: Bitcoin’s Hashrate Crashes By 34%… But Not For Obvious Reasons

Key Insights

• Texas is a major hub for Bitcoin mining in the US, contributing nearly 29% of the country's hashrate.
• A wave of freezing temperatures in Texas strained the state's energy grid, forcing Bitcoin miners to either shut down or reduce power consumption.
• This resulted in a significant drop in Bitcoin's hashrate, dipping from 629 million to 440 million terahashes per second.
• Bitcoin miners also dumped a large amount of BTC (over 10,000 BTC) on January 17th, valued at around $455 million.

Bitcoin, being a Proof of Work blockchain, depends on its miners to keep the network alive.

A metric called "hashrate", is the amount of computing power that the miners contribute to the entire network, helping it to process transactions and create new blocks.

However, according to recent reports, the network's overall hashrate took a massive hit this week, when a wave of cold and ice swept through Texas in the United States.

But what does Texas have to do with anything? And by how much did the Bitcoin network's hashrate decline?

Let's find out.

What Does Texas Have To Do With Anything?

It turns out that this is a good question.

Texas happens to be one of the major hotspots for BTC miners in the United States and contributes about 29% of the entire country's hashrate.

Now, according to Visual Capitalist, the United States is the largest contributing country to Bitcoin's hashrate, as shown by the infographic below.

This means that if Texas is a big deal in the biggest mining country in the world, it has a great deal of influence on the BTC network's hashrate.

It turns out that the US became a major mining superpower, only after China banned crypto mining activities in May 2021.

Many Bitcoin mining companies became scattered abroad, and Texas became home to some of the biggest players in the mining space, including Marathon Digital, Riot Platforms, Bitdeer and Core Scientific.

How A Wave Of Frostbite Brought Texas To Its Knees

It turns out that Texas' energy infrastructure was not ready for the wave of ice that swept through the state throughout mid-January.

For one of the first times since the ice storm in February 2023, some parts of Texas experienced below-freezing temperatures. Homes and businesses turned up their heaters, leading to a drag on the entire state's energy infrastructure.

Because of the limited power available, miners were forced to either turn off their rigs or reduce their power consumption, causing a pullback on the entire network's hashrate.

This dip can even be seen on the YCharts snapshot shown above, where BTC's hashrate fell from 629 million terahashes per second to around 440 million per second.

Meanwhile…

Miners Dump 10,000 Bitcoin ($455 Million) In A Day

According to data from CryptoQuant, as highlighted by Ali, the BTC miners also dumped a suspicious 10,233 BTC on 17 January this week.

This amount becomes even more shocking when we realize that its value is about $450 million at current prices.

Even worse is how CryptoQuant data shows that the last time miner reserves slid so hard, was around December 2022, when BTC was in its darkest bear market times.

This also reflects an earlier report from CryptoQuant in which the data aggregation platform noted that the Miner Position Index (MPI) had begun to spike and that the miners were selling BTC "faster than normal".

This indicates that Bitcoin is about to experience some form of volatility wave very soon.

According to CoinMarketCap, Bitcoin currently trades at around $42,450 and isn't helped by any means, considering the intense selling pressure from its miners.

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