slacknation publishes an interesting chart that compares ETC/ETH in both price and hashrate. The chart clearly shows a strong correlation between the ratio of market price in USD and the ratio of hashrate between ETC/ETH. My own personal interpretation of the volatility in ETC hashrate is that it is an effort by entities with significant mining capacity to move the ETC price to their benefit, but I have no data to back that claim so I will leave it at that.

The chart at slacknation only shows a week of data, so the trend isn’t obvious. Here is a full month of data showing the percentage of ETC hashrate relative to the ETH hashrate.

Ratio of Ethereum Classic (ETC) hashrate to Ethereum (ETH) hashrate [July 29, 2016 — Sept. 3, 2016]

Now, rather than ratios, let’s look simply at price over the same period.

Just by visual inspection, it is clear that the price of ETC is very positively correlated to the ETC hashrate and the ratio of ETC/ETH hashrate.

Let’s compare that to ETH.

The price of Ethereum (ETH) is essentially just where it was a month ago. However, over that same period, the hashrate has gone from 4,137 GH/s to 4,941 GH/s, an increase of 19.4%. If price followed hashrate in ETH, we could expect the current price of ETH to be approximately $13.90 USD rather than $11.65 USD.

The story lies in the data. Those who control resources that they can dedicate to mining have a choice. It seems that those who choose to mine Ethereum Classic (ETC) are strongly motivated by the price of the underlying token. The economics of choosing to mine Ethereum (ETH) are not so obvious. It appears there is some consideration of future value in the Ethereum ecosystem motivating miners today to continue to add resources to the Ethereum blockchain.

I am also a strong believer in the future value of the Ethereum (ETH) blockchain and believe it is behaving as its founders intended: as a platform for development rather than a cryptocurrency for exchange.