What's the correlation between price and hashpower?

Leo Zhang

By Leo Zhang

Observations on a possible correlation:

The correlation between Bitcoin price and hashrate is always a popular topic. The reason for the existence of this relationship is intuitive: when price rises, more miners join, and when price drops, miners leave. While over the long term this logic seems to hold, some market participants have started to rely on price/difficulty ratio to make market predictions. In practice using this metric as primary indicator may not always work. There are many specious attempts at developing valuation metrics for cryptocurrencies and their subcurrencies. However, in a highly manipulated and inefficient market with so much infrastructure risk, it's almost impossible to capture all variables with simple mathematics. For traders, it is important to understand these market "signals" may stop working without warning.

Other updates

Monero's discussion on a proposal to modify PoW to achieve ASIC-resistance

What We Need to Know about Proof of Work (PoW) from r/Monero

Discussion on Decred PoS mechanism

Comment from discussion Decred POS Method.

Conclusion of the Power of Tau Ceremony
(Zcash Foundation)

"Assuming the cryptography is sound, the only way for the final parameters to be compromised is if every participant colluded or were all compromised. By involving a large set of diverse and reputable participants, it becomes unrealistic for all of them to be compromised. By encouraging participants to take their own initiative and making the process as flexible as possible, we reduced the risk that all participants could be compromised by the same attack vectors."

Faster Bulletproofs with Ristretto & AVX2
(Chain)

"This gives the best of both worlds: the correct abstraction required to implement this and other protocols, and the simplicity, efficiency, and speed of a non-prime-order curve."

For more information on privacy in cryptocurrency, check out our research series. For in-depth description of how Ristretto Bulletproof works, read the documentation here.

News & Commentary

State of crypto public policy (right now)
(John Collins)

"Third, token proliferation will continue but will be dramatically curtailed by enforcement actions against the worst actors in the space, regulation-by-acquisition as more 'established' players take over previously grey-market exchanges, and just general exhaustion of energy and capital for sham projects."

DCR: a tripartite autonomous currency
(Dalpal Rating)

"Layered mining consensus. PoS miners can vote for or against the previous block generated by PoW miners. When there are enough PoS miners voting against the block the PoW rewards of this block may be reduced or even deleted (PoS serves as the second verification and check of PoW miners’ behaviors)."

Unethical growth hacks: A look into the growing Youtube news bot epidemic
(Hackernoon, by Blog Enhancement Community)

"A new type of fully automated plagiarism has been creeping up and no one is doing anything about it. In fact, the opposite is happening. Because these are video format, they often get preferred treatment in Google’s search results, as it helps their search results seem more diverse when including video, images, and other non-link content."

Commentary on the ethics of "growth hacking"

When the social bubble bursts
(New York Times Magazine, by John Herrman)

"A loss of faith in tech companies as semipublic infrastructure would also arrive simultaneously with an understanding that that’s what they had been all along: services that we depended on, ones we gave ourselves to, and that revealed themselves to be — or merely became — the sorts of services we’d rather not."