On-chain data shows that Bitcoin’s mining hashrate has just set a new all-time high (ATH) despite the asset’s bearish trajectory.
Bitcoin’s 7-day average mining hashrate has skyrocketed recently
He “Mining Hash Rate” refers to a metric that tracks the total amount of computing power that miners as a whole have connected to the Bitcoin blockchain. Miners need this computing power because the BTC network uses a Proof of Work (PoW) consensus mechanism based on which validators compete with each other to solve mathematical problems to add the next block to the chain.
As such, the hashrate can reflect how miners view the cryptocurrency. An increase in the metric could suggest that these validators are finding the asset attractive at the moment, so new miners are coming in and/or old ones are expanding their facilities.
Similarly, a decrease implies that some of the miners have decided to disconnect from the network, possibly because they no longer believe that BTC mining is profitable.
Now, here is a chart showing the trend in the 7-day average Bitcoin mining hashrate over the past year:
Looks like the 7-day average value of the metric has been rising over the past day | Source: Blockchain.com
As shown in the chart above, the 7-day average of Bitcoin’s mining hash rate spiked near the end of July to set what was then a new record for the metric. However, following this peak, the indicator experienced a rapid decline and it was not until the second half of August that the metric recovered.
This rally held for a while, but the indicator ended the month with a pullback to previous lows. As for why these trends played out the way they did, the corresponding BTC price action might hold the answer.
Bitcoin miners earn most of their income through Block grant which they receive for solving blocks on the network. A feature of the chain is that these rewards remain fixed in BTC value and are also delivered more or less at a fixed time interval.
This means that there is actually only one variable associated with them: the cryptocurrency’s dollar value. Therefore, every time the price goes up, so does miners’ income. The late July high in hashrate occurred as BTC rallied towards the $70,000 level, while the drop that followed this peak occurred as the asset itself experienced a sharp decline.
Interestingly, since September began, the 7-day average Bitcoin mining hashrate has been increasing despite the fact that the price has been steadily declining.
This suggests that miners have decided to be bold and have expanded their facilities in anticipation of a future rally. The hashrate had also shown a similar trend earlier in the year, which had led to the rally towards BTC’s ATH price.
It now remains to be seen whether this Hashrate expansion to a new ATH will work for Bitcoin miners this time as well or not.
BTC Price
At the time of writing, Bitcoin is trading at around $55,100, down nearly 6% over the past seven days.
The price of the coin appears to have been heading down over the last few days | Source: BTCUSD on TradingView
Featured image by Dall-E, Blockchain.com, chart by TradingView.com
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