The Bitcoin hashrate reached another new all-time-high (ATH) this week at over 86 EH/s (Exa hashes per second). Hashrate is the number of attempted solutions (hashes) to the Proof of Work (PoW) equation per second. Each successful solution generates a new block.
To give perspective on this number, Bitcoin reached 1 EH/s in January 2016. The current rate is nearly 4 million times faster than the processing power of all the supercomputers on the top 500 list combined.
Driven by Scarcity
The drastic increases in hashrate are associated with a large number of factors. First, transactions on the network drive the value of fees on each block and are therefore a contributing factor.
But more than transactions have, the reward for each block creation has lead to an increase in miner activity. With just 3 million Bitcoins remaining, the push to mine as many as possible continues.
— Samson Mow (@Excellion) September 2, 2019
As the price of each Bitcoin continues to rise, albeit slowly, the value of mining each block also increases. Even with the coming ‘halvening’ (when the reward for each block is cut in half), mining is still a substantially profitable investment. The race for mining the last of the Bitcoins will continue.
Recent statistics also indicate that as much as $4 billion is spent on energy usage to maintain the mining hashrate. As the rate grows in the coming years, this value will only continue to increase.
Additionally, as adoption increases and the value of each individual Bitcoin continues to rise, more miners will likely enter the fold. While the overall number of miners is not necessarily a limiting factor, the push for block rewards at higher values of Bitcoin will inevitably continue.
Bitcoin Market Changes
Generally, the hashrate increases with positive price movements. The fact that the rate has moved without the preceding price variation is indicative of a shift in transaction and network use.
Increases of this type have often been indicators of future price growth as well. Increasing network use can drive the price upward, as the virtuous adoption cycles that Satoshi described continue occurring.
Do you think the Bitcoin hashrate will continue reaching new ATHs as adoption grows, or is this simply a bump in the rate due to price fluctuations? Let us know in the comments below!
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