The Bitcoin network has just registered a new hash rate of 117 EH/s, an encouraging move that may be a precursor of where BTC price leans in the immediate term. Interestingly, the uptick is four months to a decisive Bitcoin halving that reduces daily BTC emission and therefore daily returns for miners.
The Intrigues of Proof of Work Systems
Well, what do you know… New Bitcoin hashrate ATH.
Bitcoin miners know…
Halving 4 months away. pic.twitter.com/28NXd2Mevu
— hodlonaut🌮⚡🔑 (@hodlonaut) January 6, 2020
Bitcoin is the first network that uses the Proof of Work consensus algorithm.
Miners from across the globe can plug in and funnel their computers computing power, measured in hash rate, to process BTC transactions and to secure the network against third party attacks.
It’s an energy intensive activity that is cut-throat competitive and worsened by the high demand of the latest up-to-date ASIC miners. Besides, more entities are seeking to tap in the lucrative trade and are rapidly setting up mining farms.
The Rise and Rise of Hash Rate-or Mining Power
The surge in the hash rate, a metric that shows how fast it would take a mining gear to calculate hash functions generated from Bitcoin’s SHA-256 encryption, highlights the confidence amongst miners.
From the way the Bitcoin network is coded, an influx of miners (as shown by hash rate increase) means the network’s mining difficulty will also rise in tandem.
Bitcoin starting 2020 with a BANG.
Hash Rate hit a new all time high on 1/1/2020: 119M TH/s.
Finally broke above the last ATH set more than 2 months ago in October.
Bitcoin Network stronger than ever before 💪
Happy New Year! 🍾 pic.twitter.com/c0dfvewXfy
— Charles Edwards (@caprioleio) January 2, 2020
Only mining pools with the most hash rate, or farms using the latest mining gear, stand a chance of earning the 12.5 BTCs emitted from the network every 10 minutes and the transaction fees.
Bitcoin Price Influence Hash Rate
Extended, the uptick in hash rate hints at a price increase in the medium term. Bitcoin is structured in a way that hash rate follows price. The higher the price, the more the miners and therefore the higher the uptick.
2020 is already promising to become a great year for bitcoin. With the imminent halving set to take place later in the year, the flagship crypto has already hit a new record with its network hash rate once more topping the previous all-time highs of 2019. pic.twitter.com/7iywKZFzUf
— Gabriellyan (@GabriellXL99) January 2, 2020
On the reverse, whenever prices tumble, hash rate follows suit—though it is not always the case as there are often asymmetrical delays in the trailing effects, and weak miners often switch their energy consuming gear at the face of the mounting operation costs and low return on investment.
At the time of writing, BTC is trading at $7,520. Bulls are back in contention as prices bottom up from Dec 2019 lows.
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Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies and enjoys the opportunity to help educate bitcoin enthusiasts through his writing insights and coin price chart analysis. Follow him at @dalmas_ngetich