Bitcoin Prices Plunge, Will Miners Start Shutting Down Platforms?

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Bitcoin prices are under immense selling pressure as of the April 20 write-up. This comes as mining difficulties and hash rate reach record highs.

Bitcoin prices fall

BTC is trading at around $28,100, down around 7% from the April highs. Also, looking at the performance in the daily chart, it looks like the bears continue, anchoring on the April 19th bearish candle.

The April 19 losses were deep and reversed the refreshing gains earlier this week. The resulting bar also had decent trading volumes, suggesting traders were eager to sell.

Currently, BTC is trading below key resistance levels set in April. Currently, $31,000, marking the April 2023 and first-half 2023 high, remains a crucial reaction point that chartists are watching closely.

Bitcoin Price April 20 | Source: BTCUSDT on Binance, TradingView

The April 20 price drop also forced Bitcoin below the 20-day moving average, or average BB, for the first time since March 13. That day, BTC prices rallied as the banking crisis in the United States, following the bank run by Silicon Valley Bank (SVB), provided tailwinds.

The March 13 rally may have provided an anchor that saw BTC rally over 55% from mid-March to $31,000 in early April.

Hash rate and mining difficulty at all-time highs

With Bitcoin prices falling after a 90% increase from December 2022, the hash rate and difficulty have increased.

Hash rate is a measure of the computing power channeled by miners to secure the Bitcoin network and ensure that all transactions included in a block are valid.

Miners are special entities using special equipment that provides computing power to the network. Indeed, Bitcoin is a proof-of-work blockchain and relies on a community of miners for decentralization and security.

The difficulty depends on the hash rate and is set at the protocol level. It determines how easy or difficult a miner can confirm transactions and add a block to the blockchain approximately every 10 minutes.

Currently, the Bitcoin hash rate stands at over 355 EH/s and at all-time highs. Miners seem unfazed by the price action and continue to use gear despite the price drop. This was the trend in the first four months of 2023, when the hash rate fell from 253 PE/s on January 1 to current levels.

Due to the direct correlation between hash rate and difficulty, miners find it difficult to mine new blocks and need to upgrade their chipsets to efficient versions to stay competitive.

Over the past five sessions, the Bitcoin network has adjusted the difficulty higher to 48.71T, with the last adjustment occurring on April 20. This year alone, Bitcoin difficulty has increased by 41%; which means that miners have to use more computing power to discover blocks.

As hash rate and price diverge, it remains to be seen whether miners should temporarily shut down rigs and save on operating costs.

Feature image from Canva, chart from TradingView

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