The price of bitcoin dropped over the weekend while the offshoot of bitcoin known as bitcoin cash did only the opposite. The shoot up in price for bitcoin cash was so high that is shot right past the second highest cryptocurrency by market capitalization known as Ethereum. The value of the shoot off went as high as $29.9 billion over the weekend, leading investors to rethink how they invest in the currency.

While the price may entice some to get in the market, it is an interesting factor of other things in the market. The main factor in the price increase is known as the hash rate. Hash rate is the amount of computational power that it takes to mine one digital coin, and it is astronomically lower for bitcoin cash than it is for its older brother, bitcoin. The current drop in the hash rate of bitcoin could ultimately set off what investors fear. This is known as the “chain death spiral.”

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This spiral could eventually make the bitcoin network useless, and recently the currency showed that the potential for this to occur is much higher than previously thought. The hash rate fell by around 50% over the weekend, and only looks like it may continue to fall. For those who don’t know what a death spiral is, it is as follows. The way bitcoin or any cryptocurrency is mined is through the use of blockchain.

Miners use computing power to mine a “block” in the network which occurs around every 10 minutes with bitcoin. This is the amount of time that it takes to mine a block of transactions in the network and in turn shows how difficult it is to mine the currency. The hash rate usually adjusts itself based on how long the transactions take but that is becoming more and more difficult. If the bitcoin network is unable to figure out the issues with the hash rate, it may ultimately show that bitcoin no longer has a firm grasp on the cryptocurrency world.


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