Bitcoin Hash Rate Hits New All-Time High Despite Price Issues

The price of Bitcoin may not seem exciting this month, but the network’s total hash rate has once again hit new regular all-time highs.

The divergence between security and price is a sign that Bitcoin mining companies are happy to continue installing new computer hardware, even amid uncertain business and market conditions.

Bitcoin’s Relentless Hash Rate

According to on-chain analytics firm Glassnode, miners’ earnings have declined substantially since Bitcoin’s price hit an all-time high in March.

While largely due to the BTC price crash and Bitcoin halving in March, which crushed Bitcoin block grant rewards, it’s also because fee income of Bitcoin transaction sink into the channel.

However, the hash rate still hit a new high of 693 exahashes per second (EH/s) on Sunday, keeping competition high in a low-income environment. “Currently, the average number of hashes required to mine a block is 338,000 exahashes,” Glassnode wrote.

Also, while this would normally prompt Bitcoin mining companies to start selling their BTC to cover their costs, on-chain data suggests they have adopted a buy-and-hold strategy.

“Miners tend to be pro-cyclical, being sellers during downtrends and HODLers during uptrends,” the analysts continued. “The increase in hash rate and difficulty represents an increasingly expensive production cost for BTC, which may negatively affect miners’ profitability in the near future.”

Marathon Digital, the largest publicly traded mining company, has publicly confirmed that it is now HODLing as much BTC as possible. It is also using convertible debt to buy more BTC like Bitcoin development company MicroStrategy, suggesting greater confidence in the immediate investment of BTC over the mining business itself.

Will Bitcoin price recover for miners?

On the one hand, some of Bitcoin’s on-chain metrics don’t look great for its price: Bitcoin’s net settlement volume has declined toward its annual average, and its monthly centralized trading volume has fallen well below the annual average. In other words: less trading, less speculation and less demand for BTC.

On the other hand, several popular investors, such as Bitwise CIO Matt Hougan and BitMEX co-founder Arthur Hayes, believe that Bitcoin will recover by the end of September.

According to Hougan, September is seasonally slow for Bitcoin and stocks in general, while October and November are some of the asset’s best months on average. “My base case remains that we see a significant rebound as that uncertainty begins to dissipate in October and November,” Hougan said Monday.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!