Ethereum Crashes 20%, Doge Keeps Gains
Ethereum has lost $500 overnight, falling from $2,560 to a current price of $2080 at the time of writing.
The currency fell in concert with bitcoin, which dropped by $10,000 within an hour, down to $51,000 before somewhat recovering to $54,000 due to some mining farms closing down in China temporarily.
It is believed ethereum miners are affected as well, although it is not currently showing in ethereum’s hashrate chart.
Local sources say the power outage involves eth mining machines, which have been turned off now following a safety inspection due to an incident in a coal mine.
Despite some farms opening in the United States and Europe, China remains dominant in ethereum mining, with it unclear whether this incident is directly affecting it price wise, or whether it is just following bitcoin.
Otherwise eth was bullish as it experienced a protocol upgrade earlier in the week, with the currency gaining on bitcoin.
Now the ratio seems to have lost a bit, down to 0.0384 bitcoins from 0.04, but considerably up from 0.03 last month.
Dogecoin on the other hand doesn’t seem to care much, and it has even risen after bitcoin started crashing at 3AM UTC.
After nearing half a dolla, Dogecoin fell to 23 cent, with it then again finding support at 24 cent yesterday.
Considering the bitcoin crash, you would have expected this to have completely rekt dogecoin, but instead shiba gone up to 30 cent now.
The reason is because maybe they, quite rightly, don’t care about some Chinese miners, and even if they did, dogies have made the right judgment in up instead of down.
That’s because where fundamentals are concerned, nothing has changed as bitcoin is working as expected.
Where supply is concerned however, something has changed because the closure of these mines means less bitcoins are being created at the current time.
If we take the 40% fall in hash to be 40% of the new mined coins, then for the next two weeks there would be 40% less new coins than otherwise.
The exact number is a lot more complicated, but as just an example, for two hours there was no block. So 12 x 6.25 x current price equals at least $4 million less bitcoin created today.
This will re-adjust in as far as the halvening will come a week or two later assuming nothing changes hash-wise until the halvening.
But all things considered and in the short term, from a pure supply and demand perspective, this is bullish because there will be less new supply, and so miners as a whole will have less coins to sell in the near future.
From a more subjective market sentiment perspective, noobs probably have no clue about hash or much else, while whale traders obviously probably found an opportunity to shake up weak hands a bit.
Yet fundamentally, this is good for bitcoin believe it or not, both directly in as far as there will be less coins and indirectly in as far as mining will continue to become more decentralized.
So doge heads might joke and whatever, but this is an OG coin, while in bitcoin there clearly needs to be a bit of an educational effort to explain these basic but complicated things to newcomers so that they understand some stuff that are a bit interesting have happened where mining is concerned, but nothing anywhere serious, and certainly not a $10,000 candle serious.
There will just be less bitcoins mined, and maybe on some rare occasion you might have to wait an hour for a confirmation instead of ten minutes, for the next week and a half or so until the code re-adjusts the difficulty of mining, and thus the rate of coin production, to keep it within that target of 6.5 bitcoins every ten minutes.
For eth it is a bit different, and in some ways completely different, because the code doesn’t have this two weeks window to re-adjust difficulty, instead it does so every block and blocks in eth are every ten second or so.
In eth therefore there won’t be a temporary reduction in new supply, and thus there won’t be blocks that take longer than usual.
In effect nothing has happened in eth as far as the network is concerned despite some reduction in its hashrate because it doesn’t have this two weeks re-adjustment window.
Bitcoin does, and whether two weeks or by the block is better, is subject to a very esoteric debate that considers very rare edge potential cases in mental algorithmizing of which is better.
As far as our opinion goes, meh. Theoretically bitcoin’s is more robust, but Vitalik can probably give a long lecture for why that isn’t the case, so no one really cares because the two weeks window is just fine as well.
That’s because say for example this was a planned 51% attack where 40% of miners have been taken out or worse, have been captured. If the difficulty adjusts, they need only in this case 20% more hash (of current hash) to very robustly 51% if they have captured the miners, and 30% if taken out. If it doesn’t adjust, they need 60% of current hash if taken out, and still about 20%, but now strugglingly, if captured.
So this is uni lecture stuff about network security and liveness, and probably even thesis worthy (although only a handful of geeks will be the audience) on how to strike the best balance between keeping the network secure while also keep it going.
Where bitcoin currently is concerned it is still as secure as it was last week, and the network is still moving with blocks still found around every ten minutes, but on some occasions now it can take an hour or two.
So almost nothing has changed, except where raw pricing valuation is concerned, bitcoin is now a bit rarer temporarily than it was last week.
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