The hashrate of Bitcoin mining has been reaching new all-time highs in recent days. This trend has been steadily growing since the beginning of the year and shows no signs of stopping. It is likely that new records will be set in the coming weeks.
The highest peak in weekly averages was reached on October 12th, at 456 Eh/s. It’s important to note that these numbers are estimates and can vary depending on who calculates them. The estimate of the maximum peak comes from Hashrate Index, which is based on the average of the last seven days.
The hashrate has been steadily rising since the end of 2022. It surpassed 270 Eh/s at the beginning of 2023, jumped to nearly 300 Eh/s by the end of January, and continued to rise throughout the year. In October, it crossed the 450 Eh/s threshold for the first time in history.
It’s worth noting that during the 2021 bull run, the hashrate never exceeded 200 Eh/s. The current value is more than two and a half times higher than during that period of all-time high prices.
The growth of hashrate is slow because it requires producing, purchasing, and activating new and more powerful machines, which are costly. Each machine can only reach a maximum of about 350 Th/s, which is a tiny fraction of the total hashrate. Increasing from 400 to 450 Eh/s would require over 140,000 machines.
Hashrate depends on the price of Bitcoin because mining rewards are paid out in BTC. When the market value of Bitcoin decreases, miners need to reduce expenses by shutting down some machines. Conversely, when the price rises, hashrate growth resumes.
One problem facing miners is that hashrate has been increasing more than the market value of BTC since August, reducing mining profitability. Costs have risen while revenue hasn’t increased accordingly. Profitability has fallen from $0.08 per THash/s per day to the current $0.06. However, this is still higher than late 2022 when profitability was $0.05.
The increase in hashrate in 2023 is not solely due to the price of Bitcoin but also the introduction of more efficient mining machines. This increase in efficiency may continue to drive hashrate growth.
Miners also face the impending halving in April 2024, which will halve their rewards. They may be maximizing the use of less efficient machines before shutting them down permanently after the halving. This factor could impact hashrate growth as well.
Some miners may be accumulating BTC now while prices are lower, hoping that it will increase in value in the future. The cost of mining depends on price and hashrate, so reducing hashrate can also reduce costs.
Ultimately, the profitability and cost of mining will depend on the price of Bitcoin in the coming years. Miners may see value in mining now while prices are lower, anticipating a rise in the future.
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