Bitcoin’s price might be stable and consolidating of late, but the Bitcoin hashrate has just hit another all time high (ATH).
Barely 2 months since the Bitcoin halvening and the expected miner capitulation, the miners have never been working so hard as the Bitcoin hashrate hit 147.88 exahahses per second (EH/s).
Bitcoin Hashrate Hits New All Time High
With much of the bullish confidence seemingly dissipated from the Bitcoin market, you might think the fundamentals are what’s driving the price stagnation.
But nothing could be further from the truth. The new Bitcoin hashrate ATH is also up 100% since this time last year, and more than 10 times higher than the hasrate when Bitcoin was at $20k in December 2017.
What Is The Bitcoin Hashrate?
The Bitcoin hashrate is a measure of the combined computational power of all the hundreds of thousands mining computers working away at the Bitcoin protocol.
Each mining rig works collectively to help verify transactions, and solve the cryptographic puzzle that allows them to add the latest block onto the blockchain, something the winning miner is rewarded for with the block reward..
The combined hashpower is a also an indication of the security of the Bitcoin network, meaning the most secure network ever created just keeps getting even more secure.
Will This Be Reflected In The Bitcoin Price?
The first thing you must know is that any market can be irrational for longer than you think possible. Solid fundamentals usually shines through, but the irrationality, especially a small market like Bitcoin, can be difficult to comprehend at times.
But many analysts believe the steady rise in the Bitcoin hashrate will trigger a move higher.
Prominent Bitcoin proponent, Max Keiser has been busy on Twitter publishing a string of tweets about the Bitcoin hashrate ATH.
‘Hashrate precedes price,’ was Keiser’s opening gambit.
And the Keiser Report presenter said that the actual price wasn’t the main thing, but that the increase in hashrate ‘shows confidence USD collapsing,’ explaining how Bitcoin would be extracting energy from fiat.
Seriously-joking, Keiser went on to say the USD was held together with ‘trillions of dollars worth of sticky tape and rubber bands.’
And because the US government was doing nothing to halt the rise of the Bitcoin hashrate, it is a clear sign to the long-time Bitcoin bull that Washington was ‘doing nothing to stop a hyperinflationary collapse of the USD.’
Bitcoin’s Energy-Value Lagging Behind It’s Fair Price
Bold words as ever from Keiser, but his beliefs are backed up by digital asset manager, Charles Edwards’ ‘Energy-Value’ model for Bitcoin’s value.
In a research report titled Bitcoin Energy-Value Equivalence, Edwards says Bitcoin’s value should be measured as ‘a function of its energy input in Joules.’
The Energy-Value formula states that every piece of energy input should increase the value of Bitcoin, and vice versa for any decrease in energy.
And we can see in the image below that the energy value of Bitcoin has closely monitored the actual price.
Back in December 2019, when the report was carried out, the price of Bitcoin was about 50% under the fair Energy-Value of around $11,500.
Therefore, with the hashrate about 30% higher than the December hashrate, we can estimate a price of about $15,000, according to the Energy-Value model.
Why the Surge In Bitcoin Hashrate?
With the expected miner capitulation immediately after the Bitcoin halving not really gaining any momentum, we ask what’s behind the surge in Bitcoin’s hashrate?
Well the mining industry is becoming ever more competitive as the race for more powerful mining rigs intensifies.
Added with investment in the mining space by huge investment firms like Fidelity, the race to higher hashrates seems like it’s only just beginning.
Bitmain released its most powerful ASICs rig last quarter. The Antminer S19 Pro is leading the hashrate now with up to 110 TH/s.
Not to be outdone, however, MicroBT is about to release its new Whatsminer M30S++ which has a top hashrate of 112 TH/s.
Both mining manufacturers are said to be inundated with orders and simply can’t make enough to meet demand. Therefore, all this new hashhrate and investment is pumping the Bitcoin hahsrate to higher highs, which will likely be dwarfed this time next year.
Bitcoin Mining Is Only Just Getting Going
The Bitcoin hashrate is at a new all time high. It’s doubled since this time last year, and up over 1000% since the Bitcoin price was at an all time high.
There is billions of dollars being invested in the Bitcoin mining industry by investment giants such as Fidelity, as everyone clamours to turn their energy into Bitcoin.
Bitcoin and Bitcoin mining might be over 11 years old, and the value and rates in the price and hashrate are incredible, but I believe it’s only just the beginning of this exciting journey.
Author: Tommy Limpitlaw