The pandemic has taken its toll on cryptocurrencies, too. Bitcoin has crashed from $10,315 in February to currently $5,490.

The global sell-off has not spared bitcoin. The cryptocurrency is licking its wounds after a gut-wrenching 53% decline from its February high to its recent low of $4,825. Prices have rallied somewhat, but the price erosion has damaged the financial health of bitcoin miners. At these prices, mining has become unremunerative for many of them. (NEWSBTC)

Decline punches BTC hashrate

The decline in bitcoin’s mining profitability has had an adverse effect on its hash rate too. Hash rate refers to the combined computing power that bitcoin miners are deploying for validating transactions on the bitcoin blockchain. The hash rate metric was perched at its highest value ever on March 1 – nearly 140 quintillion hashes per second – according to data from wallet provider Blockchain, as quoted by COIN TELEGRAPH. That rate has plummeted to 82 quintillion hashes per second is of 18^th March.

The nearly 40% drop in the hash rate indicates that many miners may have capitulated to the low prices and shut down operations.

With many mining rigs now mothballed, it is clear that there will be lighter bitcoin supply in the near future until prices improve. At most, miners will sell a minimum quantity to sustain themselves and their operation, but a large chunk of supply is definitely off the market.

The removal of the supply overhang is itself a bullish factor. It could be supportive of a corrective rally in the bitcoin price.

Bitcoin bulls could be emboldened to take fresh positions without fear of a selling avalanche. Some miners may also invest in the production of the crypto as stocks. They may sell these at a later date and a better price.

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