As Bitcoin hash rate continues to rise, a new ATH could soon be in sight. Here’s what it might mean for the price based on previous pattern.
Bitcoin Hash Rate Continues To Go Up
The BTC hash rate has been increasing for the past couple of months after crashing down in June from the all-time-high (ATH) value.
The Bitcoin “hash rate” is an indicator that gives the measure of the total computing power on the crypto network.
The BTC blockchain uses the proof-of-work (PoW) system for reaching consensus. In this method, nodes (“miners” here) solve complex mathematical algorithms and the fastest one gets to add the next transaction. Because of this, these miners require high computing power in order to become a part of the network.
This type of consensus system helps with the decentralization of the Bitcoin network, and keeps the blockchain secure.
When the hash rate increases, it means more nodes are joining the network, and hence the network is becoming more decentralized. Thus, such an increase helps solidify the security of the blockchain.
Related Reading | Bitcoin Miner Revenue Feels Impact From Crypto Bloodbath
On the other hand, lower hash rate can be bad for the network as it may result in slower transactions due to fewer nodes and also lesser security.
Here is a chart showing the trend in the value of the Bitcoin hash rate over the last year:
The indicator's value seems to be going up | Source: CryptoQuant
As the above graph shows, Bitcoin’s hash rate has been trending up lately. Another feature of interest in the chart is the crash during June.
This collapse in the value of the indicator was a result of China’s crackdowns on crypto mining in the nation. A huge amount of the world hash rate resided in the country so it’s not a surprise that such a crash happened when miners had to move out of the country.
Once the miners finished their relocation, the hash rate jumped back up as the chart shows. Now, it looks like the indicator could make a new ATH soon if its value keeps rising.
Related Reading | Bitcoin Volume & Volatility Suggest The Trend Is Waking Back Up
What Does This Increase Mean For The BTC Price?
On examining the chart from before, you will find that when the hash rate made the current ATH, so did BTC’s price. This has indeed been a thing before in the past as well.
This may mean that once the hash rate makes the new ATH, so will Bitcoin’s price. However, some argue that the connection is only there because when BTC is moving towards such peaks, mining becomes very profitable, and hence more jump on in to make some profit.
If the latter view holds water, then the price might not be that closely related to the hash rate. Here is a chart showing the latest trend in Bitcoin’s price:
Bitcoin's price flattens after a sharp move up | Source: BTCUSD on TradingView