As Bitcoin (CRYPTO: BTC) has fallen by about 9% of its value over the past 24 hours, experts suggest that the news of a power outage in China may be to blame.
What happened: An eclipse in China’s Xinjiang region – where a significant portion of global Bitcoin mining takes place – could be among the causes, according to Reuters.
Luke Sully, CEO of digital asset treasury specialist Ledgermatic, told the news agency that people “may have sold the news about the power outage in China and not the impact it had on the network.”
“The power outage reveals a fundamental weakness: although the Bitcoin network is decentralized, its exploitation is not,” Sully said.
See also: Bitcoin crashes, take other cryptocurrencies with it
Computer power and network security: The power outage may have led to fears about the security of the Bitcoin network.
According to a Bitcoin hash rate chart maintained by BitInfoCharts, the computing power behind the network’s security has a sudden decrease from the April 15 value from 157 exchanges per second to just 105 exchanges per second. This amounts to a decrease of about 33%.
The network hash rate of Bitcoin measures the computing power that miners use to secure the network against attacks in exchange for the newly generated Bitcoins and the Bitcoins spent on transaction fees. The higher the hash rate, the more computing power is required to successfully execute a so-called “51% attack” on the network.
This led some people to sell, but it was probably unfair.
Edan Yago, co-founder of the Bitcoin-based decentralized financing project Sovryn, said that the exchange rates of the hash rate usually do not have a significant impact on the price.
” A reduction in the hash rate slows down transactions, which ironically makes it harder to sell coins to exchanges, ” he told Reuters. “The recent price drop falls within the bounds of typical volatility. It’s noise, not signal.”
Photo courtesy of Riot Blockchain.
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