On-chain data shows the 7-day average of the Bitcoin Hashrate has just set a new record, despite network difficulty being at an all-time high.
Bitcoin Hashrate Has Observed A Sharp Surge Recently
The “Hashrate” refers to an indicator that keeps track of the total amount of computing power that the miners have currently connected to the Bitcoin blockchain. The metric is traditionally measured in terms of hashes per second (H/s), but today a much more massive exahashes per second (TH/s) is used instead.
When the value of this metric goes up, it means new miners are joining the network and/or old ones are expanding their farms. Such a trend implies the chain is appearing an attractive venture to these validators.
On the other hand, the indicator registering a decline suggests some of the miners have decided to disconnect, potentially because they are no longer finding BTC mining profitable.
Now, here is a chart from Blockchain.com that shows the trend in the 7-day average of the Bitcoin Hashrate over the past year:
As is visible in the above graph, the 7-day average Bitcoin Hashrate has observed a sharp increase recently, which suggests the miners have added more computing power to the network. The indicator has now hit a value of 942.6 EH/s, which is a new record.
This high has come despite a couple of factors going against the miners recently. First, the price has been following a bearish trajectory since its ATH near $112,000. Miners make their income in BTC terms, but their bills are in a fiat currency like the USD, so the converted value of their revenue is what’s relevant to them.
Naturally, whenever the price goes up, so does their income, which can incentivize them to upgrade their facilities. So it’s interesting that the uptrend in the metric has continued even with the price decline. That said, this is still just a 7-day average, so it remains to be seen how the trend will develop in the near future. It’s possible that a decline will be reflected with some delay.
The other factor that has gone against the miners is the increase in the mining Difficulty, a metric built into the Bitcoin blockchain that controls how hard the miners would find it to mine blocks on the network right now.
The trend in the BTC Difficulty over the last twelve months | Source: Blockchain.com
The Difficulty automatically fluctuates about every two weeks. These adjustments change the metric in such a way so as to neutralize the change in the Hashrate. The feature exists to constrain miner income, making it so that these validators always receive the block reward at a consistent pace.
This means that no matter how much computing power Bitcoin miners add, they still earn the same amount. If new miners are joining, it means the competition just got fiercer for the same reward pool and if upgrades are happening, then profit margins just got lower (both would only be when the price remains the same, of course).
Given this, spikes in the Difficulty can often price out the miners already just getting by. The latest adjustment, which went through on Friday, caused the indicator to hit a new all-time high. But so far, it seems miners haven’t pulled back on their expansions yet.
BTC Price
Bitcoin has so far shown no signs of recovery as its price is still trading around $104,200.
Looks like the asset's value has declined recently | Source: BTCUSDT on TradingView
