Bitcoin, blockchain, cryptocurrencies - all these are relatively new terms that the general public is yet to be aware of (and not just by the huge price fluctuations). Despite Bitcoin undoubtedly reaching far in ten years, it still has a long way to go to be completely understood. We could witness this in the past few days.

We have already got used to the huge price fluctuations and high volatility of cryptocurrencies. Naturally, even Bitcoin cannot avoid these. Over the past few days, it went through several significant percentual drops. This would not be anything surprising though. Such fluctuations could be partially expected. 

The unusual thing is that the largest fluctuations took place on 23 October when the hash rate of Bitcoin hit an All Time High (ATH). According to various sources, the hash rate rose significantly on that day, surpassing its earlier maximum from 10 October this year. Cameron Winklevoss, famous crypto personality and co-owner of the Gemini exchange, calls attention to this “anomaly” (the price significantly drops while the hash rate significantly rises). He said about the price and hash rate of Bitcoin:

“The fact that the price of bitcoin isn't surging today [23 October] illustrates just how early and misunderstood this asset is.”

What suggests that Bitcoin is a misunderstood asset? If we look at it in a simple way, hash rate conveys information about the extent miners believe in Bitcoin’s future. The higher the hash rate, the bigger the trust in the profitability of Bitcoin mining. And that’s why the price of Bitcoin should not have dropped as significantly as it did on the day when its hash rate reached an ATH. One could even argue that its price should have risen on that day.

Significant price drops jeopardize mining. Mining profitability may become a problem with such fluctuations that we experienced in the past few days. Bitmain’s Antminer S9 mining rig model, one of the most widely used mining tools in the world, would not be profitable at the actual prices, for example.