How Does the Price of Electricity Act as a Natural Constraint on the Network’s Hash Rate?

The price of electricity acts as a natural constraint because mining is only profitable if the revenue from the mined coins exceeds the operational costs, primarily electricity. When the cryptocurrency price drops or the network difficulty rises, less efficient miners (those with high J/TH or high electricity costs) become unprofitable and are forced to shut down their machines.

This removal of hash rate lowers the total network hash rate, creating a self-regulating economic equilibrium.