Data shows the Bitcoin mining hashrate has set a new all-time high recently, forcing the network to up its difficulty by about 5.5%.
Bitcoin Mining Hashrate Has Observed A Strong Surge Recently
The “mining hashrate” refers to the total amount of computing power that the Bitcoin miners have connected to the network. This value can serve as a measure of the security of the blockchain, as a larger hashrate should result in a 51% hack becoming harder, given that the new hashrate added is sufficiently decentralized.
When the value of this metric goes up, it means that the existing miners are expanding their facilities, and/or new ones are coming into the network. Such a trend implies the network is looking attractive to these chain validators currently.
On the other hand, a decline in the hashrate implies some miners are finding the chain unprofitable to mine on and thus, have decided to ditch the cryptocurrency.
Now, here is a chart that shows the trend in the 7-day Bitcoin mining hashrate over the past year:
The value of the indicator seems to have gone up in recent days | Source: Blockchain.com
From the graph, it’s visible that the 7-day Bitcoin mining hashrate has observed a surge recently and has set a new all-time high (ATH). It’s a constructive sign that, even though the price of the asset has notably declined since August, the indicator has nonetheless continued to go up.
Another interpretation of the Bitcoin mining hashrate is that it represents the competition present between the miners. This is because of the existence of the “mining difficulty” feature present in the cryptocurrency’s code.
This metric controls how hard miners would find it to mine blocks on the network right now. One of the aims of the BTC network is to keep its “block production rate” (that is, the rate at which miners go through blocks) to a constant value.
When the Bitcoin miners increase their hashrate, they naturally become faster at mining blocks. Since the blockchain doesn’t want this to happen, it increases the difficulty in the next adjustment, so that the miners are slowed back down to the standard rate.
Because of this and the fact that the block rewards themselves stay constant in value (except for during halving events, where they are permanently slashed in half), a higher hashrate means a smaller piece of the pie for everyone involved.
Since the Bitcoin mining hashrate has gone up to an ATH recently, it’s not surprising that the network has also significantly increased its difficulty.
Looks like the metric has shot up during the past day | Source: CoinWarz
With today’s difficulty adjustment of +5.48%, the Bitcoin mining difficulty has also set a new ATH. It now remains to be seen whether the hashrate would drop in response to this difficulty, or if the miners would continue to back the network.
After going through a rollercoaster during the last two days, Bitcoin is back above the $27,200 level.
BTC appears to have strongly recovered today | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, CoinWarz.com, Blockchain.com