Bitcoin’s hashrate plummeted, raising fears and provoking wild speculation among bitcoiners. The decline, which began in mid-June, coincided with both geopolitical events in Iran and rising electricity costs, raising concerns about the network's stability and the profitability of Bitcoin mining. A full explanation remains well beyond our grasp. The juxtaposition of these factors forms a challenging and complex backdrop to the issues affecting the Bitcoin network … Read more.

Iran's Internet Blackout and US Strike

Iran, on the other hand, is known to host a significant share of global Bitcoin mining operations. Recent events in the region have led some to believe that Iran's internal and external conflicts are the cause of the hashrate drop.

In response, on Friday, the Iranian government declared a near-total and nationwide internet blackout—ostensibly to shield itself from cyberattacks. This move instantly sparked rumors that this country’s Bitcoin mining operations were being shut down, playing a large role in the global hashrate drop.

Adding to the turmoil, a US strike on Iranian nuclear facilities occurred on Sunday, leading to reported electric grid outages. The internet blackout and power disruptions are so severe. Those provisions, clearly targeted at Iranian Bitcoin minings, have many wondering how this will play out on the ground.

The Timeline of the Hashrate Decline

Members of the cryptocurrency community are understandably alarmed by what is happening in Iran. The data indicates that the decline in hashrate began well in advance of these incidents. In fact, Bitcoin’s hashrate experienced its largest drop over the last three years from June 15 to Tuesday.

In fact, the hashrate was already at the beginning of a very sharp drop prior to the Iranian events. As you can see from the data, the total hashrate is down a bit more than 3%. This drop somewhat eerily corresponds to the timing of the recent demonstrations in Iran. The hashrate fell by over 6.25% from June 15 until Thursday, before Iran was bombed by the US or imposed an internet blackout. That tells us that there’s more going on, here. In a similar vein, the global hashrate dropped from 884.6 million TH/s on Thursday night to 865 TH/s as of Friday morning, a 2.2% drop. The global hashrate dropped from 869.9 TH/s on Saturday to 860.9 TH/s on Sunday, a 1% decline.

Regardless of the timeline, the Iran theory should not be disregarded as the reason behind the recent and sudden Bitcoin hashrate crash.

Rising Electricity Costs and Heatwaves

The increasing cost of electricity. When over 93% of all Bitcoin mining operations have already been mined, the profitability of mining operations is becoming more sensitive to energy prices.

The current dangerous heat wave across the US is further increasing power demand and boosting power prices. New York-based utility Con Edison recently asked customers to conserve energy during the ongoing heatwave, which boosted power prices in some regions to their highest since January. This increase in electricity prices directly impacts the profitability of Bitcoin mining, potentially leading miners to reduce their operations or shut down entirely.