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Bitcoin infrastructure nothing short of “modern marvel” despite hash rate plunge

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Bitcoin’s network hash rate has dropped this week. Over the past 24-hours, the cryptocurrency has lost over 40% of its hash rate and was down to figures last seen in November 2020, according to the latest chart by Blockchain.com. the seven-day average of Bitcoin’s total network hashing power slid close to 127 EH/s on Friday. Since then, it has noted a minor recovery and was currently found to be at 130.28 EH/s.

Hash rate is essentially the total amount of computational power used to mine and process transactions on the BTC blockchain. Hence, the greater the hashing power in the network, means more resources are devoted to processing transactions, hence, more security and resistance to attack by malicious entities.

Bitcoin hash rate:

BTC 1
Bitcoin infrastructure nothing short of "modern marvel" despite hash rate plunge 2

In recent times, however, the hash rate dropped amidst several reports about crackdowns in China linked to BTC mining operations across various provinces due to tighter regulatory scrutiny. Several prominent Chinese bitcoin mining pools are facing further drawdown in terms of hash rate after Sichuan ordered a state-owned power grid to slash the energy supply for 26 local mining farms initially. Currently, almost 15 large BTC mining pools by real-time computing power are witnessing a considerable plunge in hash rate drop.

In addition, China-based, 1THash, which happens to be one of the world’s largest mining pools, shed almost 70% of its hash rate last week.

Community reactions to hash rate drop

Several notable figures in the space speculated that there will not be any long-term consequences since. They are of the opinion that the Bitcoin hash rate will eventually flip after the network miners shifts their base from China to other regions

Hashkey Group’s Molly tweeted,

“We gonna witness a history in bitcoin mining tonight, all mining farms (about 8m kw electricity load) will shutdown at 12pm Beijing time tonight, Harare rate already dropped significantly after sichuan gov announce shut down bitcoins mining farms in Sichuan.”

Despite the low figures, many of the proponents were not worried about the network at all. Castle Island Ventures Partner, Nic Carter, for one, called the infrastructure a “modern marvel” and tweeted,

“Bitcoin’s hashrate transition, in which >50% of its industrial base (representing $15-20b in ann. revenue) leaves China and becomes globally dispersed, while Bitcoin continues to maintain 100% uptime, is nothing short of a modern marvel. Name another industry that could carry out an infrastructural transition that seamlessly within a year. It’s astonishing”

Ethereum User Loses $5.2M After Two Grave Mistakes

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Over the last day, the Ethereum user has fortuitously spent about $5.2 million on transaction fees to make just two ETH transactions. On June 10, the user-initiated a transfer of only $130 to ETH, accidentally incurring a cost of $2.6 million.

A few hours later, the same Ethereum user started another transaction. This time round, however, the transaction involves a much higher amount of Ethereum worth $86,000. The problem is that users still spend the same amount of transaction fees, another $2.6 million error. Oh, Ouch!

Mining pools’ reaction to the $5.2 million Ethereum user mistake

In the two cases, the mining companies have frozen the funds and are exploring the option to give them back to their original owner. Spark Pool, which mined the first transaction, issued a public statement instantly after block number 10237208 was extracted, noting that it has launched investigations on the matter.

Moreover, Spark Pool noted that the mining firm has the experience of handling similar issues. Notably, the firm saw a similar incident more than a year ago when block number 7238290 was mined more than a year ago. The transaction involved a transfer of 0.1 ETH, at the cost of 2,100 ETH in transaction fees.

On the other hand, the second transaction involving block number 10241999 was mined by a different mining firm by the name Ethermine. Similarly, the firm reacted instantly to the incident and tweeted that the original owner to contact their customer support to settle the matter.

 

 

A bad mistake or a money laundry strategy?

Some people are contemplating that the two transactions could have been a money-laundering tactic. Theoretically, an Ethereum miner could turn illegally earmarked ETH into legitimate by miner’s reward by including a vast transaction fee and mining the block themselves. This is practically possible since ETH miners decide which transactions to include in their blocks.

Nevertheless, this does not seem to be the case in the two incidents. The strongest point of view against the argument is that two different transactions ended up in two separate mining pools, which uses thousands of ETH miners scattered globally, to find new blocks. This means that the funds were not being sent to one receiving entity; since they would be eventually divided among the thousands of miners that make up the pool.