According to data on the chain, Bitcoin mining hash rate hit an all-time high after a significant drop in the summer. The network hash rate, the computing power required to complete a block, increased by 18% from August to 232 million TH / s (terahash per second).
The summer drop in BTC’s hash rate was canceled
As seen above, the beginning of the year saw an inverse correlation between the price of Bitcoin and the hash rate. While BTC’s value has declined after its all-time highest price in November 2021, the network’s hash rate has risen to 200 million Th / s. However, both metrics somehow consolidated towards the end of the first quarter of 2022. Bitcoin had its value range around $ 40,000, while the hash rate held the level of 200 million Th / s.
Subsequently, the inverse relationship continued as Bitcoin further declined as the mining hash rate reached a maximum of 227 million Th / s. However, the summer saw both metrics directly correlated with the hash rate which dropped to around 200 million TH / s prior to its recent hike.
The latest hash rate hike comes in the wake of a summer when a record heatwave in Texas forced a decline in mining operations. Large US mining companies have been forced to do so deactivation operations between rising heat, falling BTC value and rising energy costs. This summer’s hash rate drop was the worst since China’s 2021 mining ban caused a similar drop.
Texas heatwave forces miners to shut down operations
After the Beijing ban, the United States became the main mining hub accounting for the majority of global mining operations. Thanks to favorable cryptocurrency laws and relatively inexpensive electricityTexas has emerged as a suitable destination for miners.
However, the Texas summer heat had a negative impact on mining operations this summer. The record heat wave put a strain on the state’s power grid, forcing nearly all industrial-scale miners to shut down their machines. This has led several outfits to report significant losses similar to the Argo blockchain, which saw mining profits drop by 20% in August.
Meanwhile, well-capitalized miners have handled the crisis better than others, with the industry having seen significant consolidation. Companies like Riot, which recently embarked on large-scale mining development in Texas, have benefited greatly from the closure. The company was able to resell its previously purchased electricity at a profit to the grid. However, falling energy costs, lower temperatures and rising hash rates suggest that miners are returning to the fold.
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The implication of the Surge Hash Rate
As a proof-of-work (PoW) cryptocurrency, Bitcoin’s hash rate refers to the total computing power needed to process transactions and mine new coins. All transactions are recorded on the blockchain, a digital ledger in the Bitcoin network. To do this, miners using powerful computers must guess a hash, an alphanumeric code, which represents the data of a transaction before it is added.
Consequently, since each hash is random and complex, a considerable amount of energy is required to power these computers. Once the miners resolve the hash, a new block is added to the blockchain and a new unit of digital currency is rewarded to the successful miner.
Usually, hash rates serve as an indicator of the participation rate of the network’s miners. Furthermore, as Bitcoin and other cryptocurrencies are decentralized, the security of the blockchain network is increased by the participation of more miners. Therefore, the surge in Bitcoin’s hash rate could cause a corresponding increase in BTC’s value as hash rates generally follow the price of their underlying assets.
Likewise, Bitcoin has seen a corresponding increase in value since the end of August. The leading cryptocurrency gained nearly 10%, rising from just over $ 20,000 at the end of August to its current value of $ 22,330.
According to Coinmarketcap, in the last 24 hours BTC has increased by 3.4%. Its market cap is now $ 427 billion, while its trading volume has increased 44% to just over $ 50 billion. Its dominant position on the market is 40.14%.
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