Semiconductors & Hashing-Rate Correlation StudyThere are long periods of positive correlation between average bitcoin hashingrate in gigahashes/second and performance of major semiconductor ETFs like SOXX and SMH
As hashing and computing power in general shows massive increases in demand there are only a few companies that have the materials and knowledge to produce 'rocks that think' aka processors and other computing components made of earth metals and silicone.
When I see big printing bars in hashing power but 'divergence' in correlation I may consider adding to semiconductor positions via options on semiconductor ETFs and computing component companies like INTC, AMD, NVDA, and the like as it means someone went out and made a huge investment in processing power in order to make a 'blip' on the hashing map but the ETFs are reflecting a downside move. This divergence between correlation of hashing rate and semiconductors displays a market inefficiency in the expectation for demand of semiconductors and actual demand for semiconductors. This divergence is an opportunity for us to capture in my estimation.
I hope this makes sense and helps your own analysis
Good luck have fun
Much Love
xoxo
snoop
Hashing
Bitcoin S-curve with Mining History + Qualitative Hasing RateSome assumptions first:
Bitcoin follows an S-curve typical of many growing technologies (and sometimes even stocks/indices): Adoption chart
The exact gradients / inflexion points of the S-curve shown here is illustrative, as we cannot know its future development.
The hashing rate shown here (brown line) is completely illustrative and represents only the changing trend (which has been increasing or constant since 2010).
S-curves (which appear as exponential curves in linear charts) indicate a viral exchange of information which is typical of technology adoption and hype (this is where stocks/indices come in etc)
In the case of Bitcoin, although the rate of production is supposed to be constant (hence difficulty adjustment) and therefore cannot affect the price, there is a clear relationship between price development and the development of network hashing rate. The hashing rate develops with the evolution of the mining sector from 2010 hobbyist to 2018 industrialist.
The next big boom in Bitcoin will take place in conjunction with the next revolution in mining. There are some 4 million Bitcoins still left to mine. The next halving (block reward reduction to 6.25 BTC/block) is probable in summer 2020. But the halving is not necessary in order to start a new growth phase . In fact the previous two halvings occurred half-way through the growth cycle.
Some reading:
Controlled Supply
Evolution of Bitcoin Hardware
Bitcoin hashing rate
Bitcoin mining price 2015
Bloomberg mining price 2018
