Data shows that the Bitcoin mining hashrate has recently recorded its third largest 3-month increase in the last five years.
Bitcoin mining hashrate has risen sharply recently
As an analyst in Twitter pointed, only the aftermath of the 2021 China ban and 2019 bear market saw faster increases. The “mining hashrate” is an indicator that measures the total amount of computing power that miners have connected to the Bitcoin blockchain.
When the value of this metric increases, miners are bringing more machines online on the BTC network right now. Such a trend suggests that the blockchain is currently attractive to these chain validators.
On the other hand, the drop in the value of the indicator implies that some miners are disconnecting their rigs from the network. This could be a sign that the average miner does not currently find BTC mining profitable.
Now, here’s a chart showing the trend in Bitcoin mining hashrate, as well as its 3-month percentage change, over the past few years:
The value of the metric seems to have been quite high in recent days | Source: James V. Straten on Twitter
The chart above shows that the Bitcoin mining hashrate (the orange curve) has seen a strong upward trend in recent weeks. Due to this exceptional and consistent growth, the 3-month percentage change in the indicator also skyrocketed.
Based on this peak, the value of the metric has grown by around 52% in the last three months. This hash rate increase is the third highest BTC blockchain has seen in the last five years.
The largest within this period came after the 2018-2019 bear market when the April 2019 rally occurred. Many miners may find it unprofitable to mine the coin during bear markets. Therefore, the hashrate can drop significantly as miners get disconnected from the network.
When the April 2019 rally took place right after the worst part of the bear market, miners suddenly found that it was very profitable to mine the asset again, so they quickly brought their machines back online, so the hashrate showed such a sudden jump
The second largest 3-month upward adjustment came as the second half of 2021 bull run began. Earlier that year, China had imposed a ban on Bitcoin mining in the country, prompting a massive migration of miners out of the country.
This migration can also be seen on the chart, as there was a large negative 3-month change in hashrate between May and July 2021. When the miners finished their migration and re-established their facilities, the hashrate picked up.
Now, the recent trend in the indicator is interesting. During the 2022 bear market, the hashrate only saw upward growth, despite the fact that the price experienced a deep decline.
The probable reason behind this is that the miners enjoyed immense gains in the 2021 bull run, so they set their expansion plans with that in mind, and the facilities only took a while to set up, hence the positive growth in the bear market. .
Naturally, the latest sharp growth in the indicator is likely partly due to such growth and partly because the latest rally has made mining profitable again.
Bitcoin price
At the time of writing, Bitcoin is trading around $26,900, down 4% in the past week.
BTC has plunged | Source: BTCUSD on TradingView
Featured Image by Dmitry Demidko on Unsplash.com, Charts from TradingView.com, Glassnode.com
