Bitcoin Hashrate Skyrockets Despite Price Decline This Year
Bitcoin's network hashrate surged past 40 EH/s in June, even as prices have fallen sharply.
According to recent insights from CoinJournal, bitcoin's network hashrate has experienced extraordinary growth in the past few months, doubling in just four months. By June 2018, the hashrate surpassed 40 EH/s, a dramatic increase compared to the 2017 peak near 13 EH/s. Meanwhile, bitcoin's market price has dropped significantly, losing approximately 60% of its value since late 2017. What does this sharp rise in hashrate indicate, and could there be a link between this surge and the simultaneous price decline?
Understanding Hashrate Expansion
The bitcoin network's hashrate measures the total computational power dedicated to mining activities. A higher hashrate means faster processing of mining operations, enabling miners to solve blocks more quickly. While this growth can benefit miners by increasing mining speed, it also pressures mining companies to continually invest in cutting-edge equipment to stay competitive.
During bitcoin’s peak prices in late 2017, mining profitability surged, often prompting the deployment of additional mining power. However, this increase in hashrate usually lags behind price hikes because setting up new mining rigs and securing affordable electricity takes time, creating a delay between price movements and hashrate growth.
Billions Invested in New Mining Hardware
CoinJournal’s analysis reveals that since the end of 2017, around 2 million high-performance ASIC miners have been introduced to the bitcoin network, representing an investment of roughly $4 billion in mining infrastructure. Over the past four years, the hashrate has nearly tripled annually, supported by advancements in mining technology and software efficiency. This trend suggests the mining sector is gradually catching up to bitcoin’s earlier price surges, albeit with some delay.
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