The Bitcoin hashrate spiked to 58,109,199 TH/s on the 2nd of May. This marked the highest the bitcoin hashrate has been in six months.
Additionally, the network’s hashrate has only been higher on three other occasions. From the blockchain.com chart below, the bitcoin hashrate has only been higher in August, September and October 2018.
The bitcoin hashrate continued to rise during the 2018 bear market until November 2018. The decline in hashrate that followed was short lived as mid-December 2018 marked the beginning of another steady rise. On 2nd May, the hashrate climbed to reach its highest in 6 months.
What is Hashrate
Due to the absence of a centralized third party on the bitcoin network, miners are required to dedicate computing power for the purpose of validating transactions. Bitcoin miners worldwide use their mining hardware to participate in the validation process. Miners compete to find blocks of transactions to be added to the blockchain. Hence, the bitcoin hashrate simply refers to the measure of the total computing power used to keep the network operational.
The hashrate rises as additional computing power is added in the mining process. Conversely, the hashrate drops when more mining hardware is deactivated and the mining power being used decreases as well.
Implications of the Rising Hashrate on the Bitcoin Network
An increasing hashrate suggests that miners are adding more mining hardware and using more power to mine in order to gain more block rewards (rewards miners gain for finding a block) in bitcoin (BTC). Today, bitcoin mining is a capital intensive venture with high electricity costs. It is also assumed that miners participate in bitcoin mining for profits.
It is important to note that the reward for finding a block is fixed (currently 12.5 BTC). Since the block rewards received by miners are in BTC, mining will be profitable if the value of the block rewards (bitcoin) is higher than the costs of mining.