Amid the ongoing uncertainty in the cryptocurrency industry, an interesting trend emerged after Ethereum (ETH) ended its Proof-of-Work (PoW) mining algorithm and moved to the Proof-of-Stake (PoS) validation with the Merge update.
As it happens, Ethereum ending the PoW support has led some of its miners to swap their ETH mining machines for those that can mine Bitcoin (BTC), boosting the BTC hash rate as a result, as per the new ‘State of the Network’ newsletter by the blockchain analytics platform CoinMetrics, sent out on December 13.
According to the report, Bitcoin’s hash rate continued to grow throughout most of the fourth quarter of 2022, likely pushed by operators repurposing their previously Ethereum-focused GPU industrial rack space for Bitcoin mining-enabled ASICs.
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As the report specifies, the surge in BTC hash rate, which represents the computational effort to validate transactions and secure the network, coincided with the launch of the Merge update:
“It’s hard to put an exact figure on the magnitude of this resource reallocation, but Bitcoin hash rate grew quickly from 220 EH/s to 250 EH/s shortly after the completion of The Merge in September.”
Miners pressured by crash
That said, the ongoing aftershocks of the collapse of FTX, once one of the largest crypto exchanges in the world, has placed downward pressure on the price of spot BTC, as well as on hash rate in the process, demonstrating a new bout of challenges for the miners.
With it, the flagship digital asset’s mining difficulty, the built-in parameter which automatically adjusts every two weeks to keep block times under control, has decreased by over 7%, which is the largest decline since miners were forced out of China in the spring of 2021.
Bitcoin price analysis
Meanwhile, the price of the maiden cryptocurrency at press time stands at $17,686.33, which represents a 0.76% decline on the day but still a recovery of 5.10% across the week, and 5.32% over the previous 30 days.
With a market capitalization of $340.19 billion, Bitcoin retains its position as the largest digital asset by this indicator, followed by Ethereum in second place and a market cap of $157.53 billion, as per CoinMarketCap data retrieved on December 15.
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