Data shows the Ethereum mining hashrate has declined over 10% in the last month as miner profitability has dropped.
As pointed out by an analyst in a CryptoQuant post, factors like the declining ETH price and the coming merge is forcing some miners to disconnect their rigs.
The “hashrate” is an indicator that measures the total amount of computing power connected to the Ethereum network.
Generally, higher values of the metric result in better performance of the network. Also, the more decentralized is the hashrate, the stronger is the security of the blockchain.
When the value of this indicator rises, it means miners are finding the ETH network attractive right now as they are bringing more machines online.
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On the other hand, a lowering hashrate occurs when miners start disconnecting from the chain, likely because of decreased profitability.
Now, here is a chart that shows the trend in the Ethereum mining hashrate over the last few years
Looks like the value of the indicator has fallen down recently | Source: CryptoQuant
As you can see in the above graph, the Ethereum mining hashrate has taken a hit recently, falling down to just 862 TH/s.
This is more than a 10% drop from the high that the metric observed last month. The quant notes that there are a few reasons behind this trend.
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The first factor is the obvious shrinkage in miner revenues because of the latest crash in the cryptocurrency’s price.
Miners pay their running costs in dollars so the USD value of ETH is more relevant to them, which has gone down almost 40% over the last 30 days.
The second reason is the increased operating costs. The ever-rising electricity prices are bound to have affected miners as well.
And lastly, the upcoming merge with the proof-of-stake (PoS) network means Ethereum miners have a time limit to get back an ROI.
These factors have lead to mining becoming unprofitable for some miners, and as the drop in the hashrate suggests, they are selling their rigs recoup some of the costs.
At the time of writing, Ethereum’s price floats around $1.1k, up 9% in the last seven days. Over the past month, the crypto has lost 40% in value.
The below chart shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have surged up over the last couple of days | Source: ETHUSD on TradingView
Featured image from Drawkit Illustrations on Unsplash.com, charts from TradingView.com, CryptoQuant.com
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