Bitcoin mining hits new highs, a trend since the year’s start, pointing towards potential records in the weeks ahead.
The hashrate of Bitcoin mining has reached new all-time highs in the last few days.
As a matter of fact, since the start of the year, this pattern has been increasing and doesn’t appear to be going away. Thus, it’s possible that in the upcoming weeks, new records will be set.
Mining bitcoins: weekly hashrate maximum
Using weekly averages as a guide, the highest peak, at 456 Eh/s, was reached on October 12.
As always, it is important to stress that these figures are simply approximations rather than exact computations or point detections. As a result, they differ based on who computes them.
The Hashrate Index provides an estimate of the greatest peak at 456 Eh/s in this particular example.
This is the seven-day average estimate, and it has been increasing since the final days of 2022.
After the decline following FTX’s bankruptcy, it had risen beyond 270 Eh/s in the beginning of 2023, but by the end of the month, it had already soared to about 300 Eh/s, setting a new all-time high.
It essentially did nothing but grow in 2023, reaching 350 Eh/s in March and 400 Eh/s in July. Also it passed the 450 Eh/s threshold in October for the first time ever.
It should be noted that it never even reached 200 Eh/s during the 2021 bullrun, meaning that the current value is more than 2.5 times more than what was observed during the time of the all-time high pricing.
In addition, the daily peak fell short of the all-time high of September 15 on October 11. On October 10, however, the hourly high happened at the astounding rate of 531 Eh/s.
Bitcoin mining: hashrate growth
Hashrate can only increase very slowly, that is a truth.
It is required to manufacture, buy, and activate new, more powerful devices in order to increase the hashrate, and these units are extremely expensive.
Furthermore, the greatest output of a single machine is only approximately 350 Th/s, or less than one millionth of the 450 Eh/s total. Therefore, it takes more than 140,000 devices running at maximum power to even increase 400 to 450 Eh/s.
This explains why, in contrast to considerably larger and faster price changes, the hashrate increases so slowly.
Keep in mind that since all mining fees are paid in Bitcoin, hashrate is based on the price of the cryptocurrency.
Because mining is expensive and the amount of Bitcoin that is cashed in is nearly constant, expenses must be decreased in the event that the market value of Bitcoin declines. This is accomplished by turning off some machines.
In actuality, the hashrate decreased from 227 Eh/s to 197 Eh/s in the final months of 2022 when the price of Bitcoin dropped below $16,000. Hasteroserate growth resumed in 2023 when the price surpassed $25,000.
The issue of profitability
The issue, though, is that since August, hashrate has been rising faster than Bitcoin’s market value, which has decreased mining profitability.
Stated differently, expenses have gone up, but revenue has not kept pace. Due to this, profit margins have drastically decreased; daily profitability has dropped from $0.08 per THash/s to the current $0.06.
Though the price was less than $16,000 and the hashrate was less than 200 Eh/s in late 2022, the present pricing is still greater than the $0.05 per day per Th/s touched at that time.
The truth is that machines that are more efficient—that is, that produce more Th/s for the same cost—have entered the market in the interim.
The significant increase in hashrate in 2023 is mostly attributable to mining equipment efficiency rather than the price of Bitcoin, which has been steadily rising at $27,000 for the past seven months.
And for that reason, it might go on.
The challenge of halving
However, miners also have to deal with the upcoming halving.
The premium for miners will actually be halved in April 2024, forcing them to shut down their least productive equipment.
It’s feasible, in fact, that miners are getting the most out of the exact computers they will have to permanently shut down after the halving because they have grown too inefficient, precisely in anticipation of the halving.
Since the least efficient machines also make up the numbers, it’s possible that this element influences hashrate growth as well.
Once they are taken down, hashrates will likely decrease and average profitability will rise. The good news is that no miner will be caught off guard because halving is an entirely predictable phenomena.
Building Up
Furthermore, it’s not impossible that a large number of miners are attempting to stockpile Bitcoin now that it’s well below its peak, hoping that the coin mined today could be worth a lot more in the future.
Since market prices fluctuate with hashrate, costs ultimately depend on them as well. This is because hashrate is dependent on pricing.
Miners really cut expenses when they decrease hashrate, which is what will probably happen after the halving. This is true even when prices fall precipitously, as they did in late 2022.
The same holds true, though, in reverse; that is, mining Bitcoin will become considerably more costly if its price increases over the coming years.
Because of this, some miners might believe that it makes sense to mine them now because the price is lower than it was two years ago in the hopes that it will eventually climb.
