Bitcoin Hashrate rebounds 11% since late November, can it hit a new ATH?

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Data Shows Bitcoin Mining Hashrate Rebounded 11% From November Lows; can the metric sustain this and set a new all-time high?

Bitcoin Mining Hashrate continues to rise and approaches ATH

The “mining hashrate” is an indicator that measures the total amount of computing power currently connected to the Bitcoin blockchain. When this metric sees an increase, it means that miners are bringing more machines online to the network, which shows that they find the chain attractive right now. On the other hand, a decrease suggests that some miners are leaving the blockchain, probably because they don’t find the coin profitable enough to mine at the moment.

Now, here is a chart that shows the trend of Bitcoin’s 7-day average mining hashrate over the past six months:

Looks like the value of the metric has increased in recent days | Source: Blockchain.com

As the chart above shows, the 7-day average Bitcoin hash rate was at an all-time high of 273 million terahashes per second (TH/s) in early November, but by the end of the month the metric had taken a dip. dive at only 234 million TH/s. In December, however, the indicator saw a sharp rebound of around 11%, with its value now at around 261 million TH/s.

The reason for these changes in hashrate lies in the concept of bitcoin mining difficulty. A feature of the BTC network is that the speed at which miners produce new blocks (or more simply, process new transactions) generally remains constant. Naturally, changes in the hashrate deviate this rate from the standard blockchain value, because after a change in hashrate, miners have a different amount of computing power available, and therefore mine at a different speed.

To counteract such discrepancies and bring the rate of block production back to the constant desired by the chain, the Bitcoin network protocol changes its “mining difficulty”, making it harder or easier (depending on the change in hashrate) for miners to mine BTC. The table below shows how the difficulty has changed recently.

The indicator seems to have taken a big hit recently | Source: Blockchain.com

From the chart, it is evident that the difficulty has also set an ATH along with the hashrate highs. Since the mining rewards mostly remain the same, what the high difficulty implies for individual miners is that their shares go down (as they are now distributed among a larger pool of hashrate).

Miners had already been under immense pressure in this bear market, so the explosion of difficulty was enough to make mining unprofitable for some of them. This is why the hashrate dipped after the rally; underwater miners have taken their machines offline. But since the hashrate suddenly dropped by such a magnitude, the network had to react by adjusting the difficulty as well.

With this lower difficulty, the Bitcoin hashrate has started to climb again as miners take advantage of the higher margins. The metric now approximates the ATH. However, it is uncertain whether the indicator can actually make another high, as the next difficulty adjustment is expected to occur in around 3 days, which will most certainly make mining much harder, thus limiting growth. of the hashrate in the same way as the last one. increased difficulty did.

BTC has already fallen from the high | Source: BTCUSD on TradingView

As of this writing, the price of Bitcoin is hovering around $17,000, down 1% in the past week.

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