Bitcoin hashrate recovers after big freeze shuts down miners

Bitcoin’s network hashrate has returned to regular levels again, days after freezing temperatures across the United States put a strain on the nation’s electricity grid — leading to a temporary drop in hashrate.

In the days leading up to Christmas, bone-chilling temperatures swept across the United States, leading to millions without power and claiming at least 28 lives.

According to reports, Bitcoin miners in Texas, which accounts for a significant portion of the country’s hashrate, voluntarily curtailed operations to give power back to the grid — so that residents can keep their homes heated. 

The disruptions appear to have put a dent in Bitcoin’s hashrate, which typically hovers around 225-300 Exahashes per second (EH/s). This fell to 170.60 EH/s on Dec. 25.

As of Dec. 26 however, the hashrate has returned to 241.29 EH/s, according to data from hashrate mining calculator CoinWarz.

Bitcoin’s hashrate is calculated by measuring the number of hashes produced by Bitcoin miners trying to solve the next block. It is regarded as a key metric in assessing how secure the Bitcoin network is.

The recent events prompted a controversial statement from FutureBit founder John Stefanop, who suggested the fall in hashrate was due to a number of “highly centralized mines” in Texas turning off at the same time.

“I know, does not change the fact that a few large mines in Texas affect the entire network to the tune of 33%…everyones transactions are now being confirmed 30% slower because the hashrate is not decentralized enough,” he said.

“If hashrate was distributed evenly around the world by 10’s of millions of small miners instead of a few dozen massive mines, this event would not have even registered on the network,” Stefanop added.

Bitcoin bull Dan Held however refuted Stefanop’s take on the events, arguing that weather patterns do not mean centralized ownership or control.

According to the Cambridge Bitcoin Electricity Consumption Index, the United States accounts for 37.84% of the average monthly hashrate share. The top four states in the country for Bitcoin mining include New York, Kentucky, Georgia and Texas — all of which had experienced power outages due to the winter storm.

However, Dennis Porter, the CEO of Bitcoin mining advocacy group Satoshi Action Fund noted to his 127,400 Twitter followers on Dec. 25 that while the inclement weather, particularly in Texas, caused 30% of Bitcoin’s hashrate in the United States to go offline, the network “continues to work perfectly.”

Over 30% of the #Bitcoin hashrate has gone offline due to extreme weather in Texas and yet the global #Bitcoin network continues to work perfectly.

Now imagine if Amazon or Google tried turning off 1/3rd of their data centers. pic.twitter.com/G49iqBZXDL

— Dennis Porter (@Dennis_Porter_) December 25, 2022

Cheap power and favorable mining regulation in Texas has led to a Bitcoin mining boom in Texas in recent months, which is now host to some of the largest mining companies in the world.

Among those Riot Blockchain, Argo, Bitdeer, Argo, Compute North, Genesis Digital Assets and Core Scientific — who’ve recently received a $37.4 million bankruptcy loan to stay afloat.

Related: ‘There’s a lot less land to go around’ — Why White Rock established off-the-grid mining in Texas

However recent weather events have only added to Bitcoin mining companies’ list of headaches.

The bear market has plagued Bitcoin mining companies to the tune of $4 billion in debt, according to recent data.

Many notable U.S. based mining companies have filed for bankruptcy in recent months too, while many other companies are approaching near-insurmountable debt-to-equity ratios that require immediate restructuring.

The tragic weather events haven’t impacted the price of Bitcoin (BTC) thus far, which is currently priced at $16,826 — only down 0.27 over the last 24 hours.