Bitcoin miners’ income is rising – will BTC price follow?

Bitcoin (BTC) miners earned $ 60 million on an average time frame of thirty days as of May 5. Miner revenues are showing signs of recovery for the first time since the drastic drop caused by power outages in China last month.

The coal mine boilers in Xinjiang in April and the subsequent investigations led to power outages in the cryptocurrency mining industry. As a result, the miners had to turn off ASIC hardware that was providing computing power and mining to the Bitcoin blockchain.

According to data from Blockchain.com, the average 30-day income of Bitcoin miners declined to $ 57.08 million on May 2, after peaking at $ 60 million on April 16. Miners’ income consists of what they earn from block rewards and transaction fees.

Bitcoin miners’ income. Source: Blockchain.com

The drop in miner revenues coincided with the hash rate drop caused by a power outage in China. The total hash rate dropped from 172 EH / s to 131 EH / s, with a decrease of about 30 percent between April 16-23.

Bitcoin hash rate. Source: Blockchain.com

The hash rate, which has improved since then, increased to 168 EH / s as of May 5th.

Effects on bitcoin price

Bitcoin price fell sharply after the cut in China.

The biggest cryptocurrency was already correcting before the hash rate declined. After the events in China, this decline accelerated further, and the BTC price, which approached $ 65,000 on April 14, fell to $ 50,591 as of April 25.

1-day candlestick chart of the BTC / USD pair (Coinbase). Source: TradingView

Bitcoin price and hash rate dropped almost simultaneously, revealing the correlation between the two metrics.

The hash rate represents the computing power devoted to validating transactions in the Bitcoin network. In other words, the high hash rate theoretically increases the cost of attacking Bitcoin and thus ensures the security of the network.

Bitcoin price rose to around $ 57,000 on May 5, along with the hash rate. According to data from BTC.com, the difficulty is expected to increase by around 1 percent in the automatic difficulty correction that will be experienced on May 13th. The network difficulty had a 12.6 percent drop on May 2.

According to one theory, Bitcoin price is in lag correlation with hash rate and network difficulty. That is, the price is expected to follow improvements in hash rate and difficulty.

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