After a terrible plunge to 85.1E (exa hashes per second) due to the price falling off a cliff last month over virus concerns, Bitcoin’s hashrate fully rebounded in the weeks ahead and is once again a stone’s throw from beating the March 4th all time high of 133E. Here’s four reasons why Bitcoin’s hashrate is surging.
Miner confidence is rising
With the upcoming halving around May 13th, the production price of cost of Bitcoin will double, and less new Bitcoin will be created daily and dumped on the market. Miners are trying to squeeze every last bitcoin out of the current 12.5 block reward environment while they can.
If the price doesn’t quickly rise to make up for the new lower block reward of 6.25 bitcoin per found block, many miners will need to capitulate, leading to a steep drop in the hashrate, and with it, a relaxing of security and a rise in transaction fees.
The miners who are running rigs today are confident that the price will rise quickly in the near future, as they are generally not price speculators, and do not hold bitcoin long term.
Mining Equipment is improving, fast
The Antminer S17 has a hashrate of 53Th/s which is approximately 50% slower than the Antmine S19 which is scheduled for delivery starting next month. Every iteration of these machines proves more powerful and adds a significant benefit to the hashrate, they also require less electricity and for the most part run a bit more quiet than their predecessors.
The constantly improving hardware behind the Bitcoin network is why the hashrate never goes down, even if the same amount of miners are in the game. We’re currently seeing a lot of mining centralization in China, and while this does lead to certain vulnerabilities in the Bitcoin network, the main reason for this is that electricity is simply cheaper there at the moment, but as the mining equipment is constantly improving and Bitcoin gains popularity, this could change pretty quickly,
The price is setting new highs since the Coronavirus lows of mid March
Hashrate follows price, not the other way around, contrary to popular belief. Miners are not in the business of speculation, the process of purchasing machines, having them delivered, paying for the electricity to run then and then immediately selling the block rewards that are earned has to make financial sense in order for this arduous process to even start.
We’re seeing an almost 100% price rebound from the low of $3,600 on March 13th. The math is starting to make sense again for miners to turn their rigs back on, or follow through on orders that they were about to place for new machines just before the Bitcoin price fell off a cliff last month.
Bitcoin Forks underwent their own halvings this month
As previously reported by Ode Magazine, Bitcoin Cash and Bitcoin SV recently experienced halvings this month and their hashrates plummeted, as expected, and have not recovered since.
Miners are not speculators, and the versatility of the most popular mining rigs today incentivize blockchain agnosticism, as miners can easily switch to mine more profitable coins depending on short term price volatility. Miners have obviously chosen to move away from these forks and mine Bitcoin before it’s fast approaching halving, further contributing to the hashrate surge.