28.11.2021

Bitcoin transaction fees hit $ 51, network hash rate dropped by 40%

The average commission on the bitcoin network over the past 24 hours has risen to $ 51.56, according to data from the BitInfoCharts portal. This is the largest value since December 2017, when at the peak of the previous bullish cycle, transaction processing costs were in excess of $ 55.

The growth in commissions is taking place against the backdrop of a sharp decline in the hash rate of the bitcoin network. According to various trackers, over the past 24 hours it fell by 40-48% and approached 105 EH / s, although this week it was about 200 EH / s. The average block time over the last 24 hours is over 14 minutes with a target of 10.

The events are believed to be related to the events in Xinjiang, where access to electricity for miners was limited due to checks at coal mines.

“Limiting the supply of electricity in Xinjiang and its impact on the bitcoin hash rate is what economists call a ‘natural experiment.’ Very valuable data. With this data, we can find out that Xinjiang’s share of bitcoin mining is lower than expected. I think the hashrate is leaving China, and this will be a great confirmation, ”writes Nick Carter, founder of the analytical company Coin Metrics.

Carter admits that much of the dramatic drop in computing power can be attributed to variability. News of problems with the supply of electricity to miners appeared on Friday, but the network continued to work without any apparent slowdown. The hash rate is an estimate, so the displayed figure can be influenced by several factors besides the actual amount of computing power, including the luck of the miners in finding suitable solutions for adding blocks.

In addition, on Thursday, another recalculation of the difficulty of bitcoin mining took place, as a result of which the indicator updated the maximums for the third time in a row. The difficulty was calculated based on the previous period, when miners did not have any problems with access to electricity.

“If the disruptions last for three weeks, Bitcoin will face the largest difficulty drop in history, but I find this scenario unlikely. Either they get the electricity back, or the miners move their hardware, adds Carter. – This is what will happen if mining is banned in China. Blocks will be added more slowly for a while, and that’s all. “

The increase in fees also comes amid a sharp decline in the price of bitcoin to $ 51,000, which has increased the demand for sending transactions. At the beginning of the week, the number of unprocessed transactions in the mempool was about 30,000, and now it is 150,000.

“Price and hash rate have always been correlated,” analyst Willie Wu writes, citing a graph showing the decline in the price of bitcoin during the sharp drop in hash rate in November 2017 to support his words.

By the time of publication, the situation began to improve. However, variability can again play a role, so a more accurate assessment of the situation will require measurements over seven days.

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