Bitcoin’s hash rate has been steadily growing and hit a new all-time high in the first week of July 2019. The previous record was broken in the second half of June, when it reached 65.19 TH/s. Hash rate has always been a very important parameter for miners, as a higher hash rate increases their chances of solving the mathematical problem, sealing off the block and collecting their reward. Higher hash rates also secures the network from the possibility of a 51% attack.
While it is positive, there is also a downfall if the hashrate increases, as the energy consumption increases in turn. As mining difficulty increased, there was increased competition between miners and the demand for Bitcoin increased in parallel. The bull run that started in April 2019, broke 2018’s record in June 2019, when 70% of the crypto losses from 2017-18 were recovered. Network mining fundamentals have shown impressive growth in the past few weeks with both hash rate and difficulty reaching new highs.
Network factors that influence mining profitability include price, block times, difficulty, block reward, and transaction fees. Electricity costs are also a significant factor when determining profitability for various ASICs. During the flood season from April to October every year in the Chinese province of Sichuan, electricity drops to a cost of US$0.04 cents/KWh due to the abundance of hydroelectric power. At this electricity price, all ASICs are currently profitable except those manufactured in 2014.
Both the network hash rate and difficulty have reached a new record highs over the past few weeks, which may reflect relatively cheap electricity currently available in China. As electricity costs decrease and BTC price increases, more and more older ASICs again become profitable to mine. Average block times are currently just under 10 minutes with an estimated 1.38% increase in difficulty projected for the next adjustment in 11 days.
While hash rate has been hitting new highs, Google Trends for the term “bitcoin” has increased dramatically over the past few weeks, marking a new yearly high as well. Throughout the course of 2018, “bitcoin” related searches declined dramatically. As Google searches increase, Bitcoin price drops and this could be an analogy to understand the correlation between Bitcoin’s hash rate and correction.
Network mining fundamentals have shown impressive growth in the past few weeks and as long as mining will remain relatively profitable, miners will continue to add hash rate. Though transactions on the Bitcoin network have witnessed a significant drop, number of wallets has increased and has hit a record high. Fees on international exchanges has been reducing in answer to the competition and there is a possibility of further correction before BTC rebounds to $15000.
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