Bitcoin Network's Record High Hash Rate Dampens Mining Profitability
Summary:
On Christmas day, the Bitcoin network's mining computer power reached a record high, doubling from the start of the year to 544 exahashes per second. This increase concurrently raised the asset's price by over 150%. The soaring hash rate marked a steep decline in mining profitability, with the hash price falling from its yearly high of $0.136/TH/s/day on December 17, 2023, to $0.09 per TH per second per day. This milestone suggests the upcoming advent of the Bitcoin 'supercomputer' and the emergence of BTC DeFi.
On Christmas day, the Bitcoin network achieved a milestone by hitting a record high hash rate of its mining computer power, putting further stress on miners due to the decreasing profitability. Blockchain.com reported that the peak average hash rate doubled to an all-time high of 544 exahashes per second (EH/s) was evidenced by Bitinfocharts over the course of the weekend. The network's hash rates have seen a 130% surge since the start of this year. Bitcoin’s hash rate progress in 2023 showcases a significant similar trajectory with the increase in asset’s price, which escalated by more than 150% from January 1, 2023.
Will Clemente, co-founder of Reflexivity Research observed and commented on this progression from a logarithmic scale's point of view, brushing off the impact of China's mining ban in the summer of 2021 as insignificant. He further highlighted the security of this decentralized open-source monetary network.
Despite adding value to theoretical price models like the implied hash-adjusted price, an increased hash rate poses challenges to miners who have to put in more effort to secure the next block. In fact, the hash price, indicative of profitability, has seen a decline over the past week following the drop in demand for BRC-20 inscriptions. HashrateIndex indicates the current hash price to be $0.09 per terahashes per second per day.
Profitability has dropped by 34% from its yearly high of $0.136/TH/s/day on December 17, 2023. Typically, hash price hikes are seen during periods of high demand, resulting in high transaction fees, such as during the inscriptions frenzy. Glassnode analyst "Checkmatey" stated, "We've sustained high fee pressure constantly since February, without fully clearing Bitcoin mempools for almost a year."
Cointelegraph reported that the network hash rates first crossed the 500 EH/s figure in late November. This points towards an imminent arrival of the Bitcoin 'supercomputer' and the emergence of BTC DeFi.
Published At
12/26/2023 9:03:20 AM
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