On-chain data shows that the bitcoin mining hashrate has dramatically recovered from its post-Halving lows and reached a new all-time high (ATH).
bitcoin's 7-day average mining hashrate just set a new ATH
The bitcoin network operates on a consensus mechanism known as “proof of work” (PoW). In this system, validators called miners compete against each other using computing power for the chance to add the next block to the blockchain.
“Mining hashrate” refers to a measure of the total computing power that miners currently have connected to the network for this purpose.
When the value of this metric increases, it means that outgoing miners are expanding their facilities or new miners are joining the chain. This trend implies that these validators find the network attractive at the moment.
On the other hand, the downward trend of the indicator suggests that some mines have decided to disconnect from the network, potentially because they consider the chain to be unprofitable to mine.
Now, here is a chart showing the trend in the 7-day average bitcoin mining hashrate over the past year:
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The value of the metric seems to have been sharply going up in recent days | Source: Blockchain.com
As shown in the chart above, the 7-day average bitcoin mining hashrate began to decline after establishing a new ATH last month. The reduction had intensified in the first weeks of this month, taking the metric to noticeably lower levels.
This strong downward trajectory of the indicator is due to a major event on the network last month: the fourth Halving. Halvings are periodic events that occur every four years and permanently reduce btc block rewards by half.
The block rewards that miners receive for solving blocks on the network are one of the two main components of their income. The other part of their income, transaction fees, have historically been quite low compared to block rewards, so the latter have essentially been their main source of income.
As such, it is not surprising that some of the miners living in areas with high electricity prices and using inefficient mining rigs went offline as the economic effects of Halving took hold.
But then a question arises: if there were already three Halving events in the history of the asset before this one, how did the hashrate continue to grow to new highs if miners' income was continuously reduced?
Two factors explain this. The first is that mining rigs have become more efficient over the years, allowing miners to hold more power and consume less energy.
The other, and perhaps most important, is that the price of the currency has generally increased throughout its history. While block rewards remain fixed in btc value until Halving occurs, their USD value still naturally fluctuates with the spot price.
Time and time again, price growth has helped offset miners' lost revenue from halvings. Recently, the price has shown some recovery and as can be seen on the hashrate chart, the metric has also recovered.
It seems that miners have been satisfied enough with this increase in income due to the rally that they have taken their computing power to a new ATH.
btc Price
At the time of writing, bitcoin is trading at around $68,000, down more than 3% over the past week.
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Looks like the price of the asset has been going up over the last few days | Source: BTCUSD on TradingView
Dall-E Featured Image, Blockchain.com, TradingView.com Chart
