Bitcoin’s hashrate has been setting one record after another lately.
Just six days ago, for the first time in history, 300 Eh/s was exceeded, while today for the first time 320 Eh/s was also surpassed.
According to CoinWarz data, the peak occurred tonight at 321 Eh/s, after it had dropped as low as 213 Eh/s yesterday.
The day before, 310 Eh/s had been exceeded.
Records continue for the Bitcoin mining hashrate
When taking daily averages instead of taking individual hourly peaks, today’s average obviously has not yet been calculated, because the day has yet to end, while for now the peak of 5 October at 278 Eh/s endures.
However, yesterday saw one of the largest-ever increases in the difficulty, which increased by 13% in one fell swoop. The current difficulty of 35.611 T is the highest ever.
After tonight’s hashrate spike, and especially after the mighty increase in difficulty, we would actually expect a drop in hashrate.
Indeed, because of this increase the profitability of mining has dropped significantly, making it less convenient to mine BTC. It might be expected that because of this drop in profitability some miners might decide to temporarily shut down some machines.
The fact is that as of 30 September, Bitcoin’s block-time dropped below 10 minutes and has not yet returned. Even as late as the first of October it is estimated to have dropped below 8 minutes.
Block-time is largely dependent on hashrate as well as difficulty, but if the latter is updated only about once every two weeks, hashrate can vary by a lot in far shorter time frames.
So after the difficulty reduction on 28 September, the profitability of BTC mining had risen slightly, enough to presumably cause miners to turn some previously temporarily shut down machines back on.
This produced an increase in hashrate, from 212 Eh/s on 27 September to 271 on 2 October. This inevitably brought down block-time, as the difficulty remained stationary, until yesterday.
The significant increase in hashrate over the past two weeks caused the significant increase in difficulty yesterday, and now the situation can perhaps return to normal.
Expectations about the future performance of Bitcoin mining
Therefore, in the coming days, due to the decline in mining profitability, we could expect a reduction in hashrate and a return of block-time around 10 minutes.
One interesting thing is that the current profitability of BTC mining is at its lowest in two years. Indeed, with yesterday’s sharp increase in difficulty it may even fall below the already low levels of October 2020.
When miners continue to mine en masse even with very low profitability it is because they probably expect the BTC they collect to increase in value in the short to medium term. There is no guarantee that this strategy will prove profitable this time as well, nonetheless in October 2020, for example, it did work. Indeed, shortly thereafter the great bullrun of 2021 began.
The curious thing is that by now there is a lot of talk about the problems associated with Bitcoin mining, but apparently the miners are completely disinterested in these discussions, instead trying really hard to earn BTC.
Given that in the spring of 2024 their BTC reward per mined block will be halved, and given that with an eventual increase in Bitcoin‘s market value, the competition in mining may also increase, perhaps they are trying to take advantage of the good time to accumulate BTC.
It is worth mentioning that the sharp increase in the Bitcoin mining hashrate of 2022, in the face of rock-bottom profitability, is due to two factors, one of which is the significant increase in the efficiency of ASICs for mining. This causes the hashrate to increase greatly for the same amount of consumption. The other reason is the long tail of the 2021 increase in value, as hashrate grows much more slowly than the market price of BTC.
For example, in October 2020 the hashrate peaked at 157 Eh/s, with the price of BTC at about $11,500, therefore a price that has risen to about $20,000 added to the increased efficiency of ASICs perfectly justifies a hashrate that has skyrocketed to 300 Eh/s.
Hence, on the one hand, current hashrate levels seem perfectly in line, adjusted accordingly, with those of two years ago, i.e., before the last big bullrun began. On the other hand, mining at full capacity with such low profitability also indicates that miners perhaps expect BTC to increase in value, otherwise it would make little sense to invest so much in new high-efficiency machines.
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