Bitcoin’s hash rate is tumbling as the Middle East conflict drives up energy prices, adding pressure to the mining sector and broader market.
The drop in hash rate is likely tied to geopolitical tensions due to the war against Iran and surge in oil prices, given that an estimated 8% to 10% of global bitcoin mining operates in energy markets sensitive to energy costs.
With hash rate down roughly 8% over the past week to 920 EH/s, the network may be entering another phase of miner capitulation. Historically, such periods have coincided with downside pressure on bitcoin’s price, which is currently trading below $72,000, roughly 5% below its Monday high.
As a result, the network is set for an approximately 8% downward difficulty adjustment, which would mark the second-largest negative shift in the past five years, according to mempool.space.
This decline follows one of the largest difficulty drops on record in mid-February, highlighting significant volatility in mining activity.
As a result of rising competition, persistently low transaction fees, and bitcoin price volatility, this has squeezed margins and pushed many publicly traded miners to diversify into AI and high-performance computing, alongside increased bitcoin sales to support operations, acting as a headwind for the bitcoin price.