Bitcoin Hashrate Hits All-time High
What it is, Why it's bullish
Bitcoin’s hash rate hit a new all-time high this week, exceeding 398 million terahashes per second. That’s a lot of hashes and a lot of commas. And this is bullish.
So, what is “hashrate” anyway?
Hashrate" refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work blockchain, such as Bitcoin. So, it’s how much power, or electricity, is being used to power the Bitcoin miners who are securing the Bitcoin network.
In early 2021, the hash rate was ripping higher, and then China banned Bitcoin mining. Notice the precipitous drop in hash rate in the summer of 2021. Bitcoin miners regrouped however, and quickly. Miners in China quickly relocated to other countries, mainly the US and Kazakhstan. And the hashrate regained its old levels.
This is bullish for several reasons.
First, it means that Bitcoin’s price has rebounded so much that it is profitable to continue mining Bitcoin, and in turn securing the network. That is good for everyone in the Bitcoin space. Second, it implies that Bitcoin miners are undoubtedly employing more and more sources of renewable energy to mine Bitcoin. There is a built-in incentive to use the cheapest source of electricity that miners can find. Estimates now place the percentage of Bitcoin mined using renewables at around 68-70%. That makes Bitcoin mining actually one of the greenest industries anywhere.
Additionally, the all-time record hash rate means that Bitcoin has survived the China mining ban and has relocated, effectively, to other areas of the world. Areas where people and governments care more about the environment than does Communist China.
Will Clemente, a notable Bitcoin analyst, offered this observation:
(Follow Will on Twitter. He has a lot of great on-chain analysis.)
Proof-of-work mining requires an enormous amount of energy. So does securing any network, whether it be credit card transactions, banking transactions, or the stock markets. Computational power is what drives the security of networks.
Bitcoin is headed in the right direction, in so many ways.
Mining activity is again increasing. Prices are rising. Banks are imploding. Renewables are increasing.
How could you not be bullish on Bitcoin right now? Well, that’s my opinion. Do your own research. Read. Listen. And only invest what you can afford to lose. The same as with any investment, like stocks.
I thought this was a really important issue to discuss this week. So thanks for reading. Share this newsletter with your friends, the future-coiners out there.
Many thanks to all of last week’s new subscribers!
HODL on!
Bitcoin Tools, Platforms, Podcasts:
Twitter - Follow The Bitcoin Files on Twitter at @BitcoinNewslet1 for all of my articles, commentary and links to my contributions to Bitcoin Magazine.
Medium - Check out my writings on Medium, including articles not featured in the newsletter. Join my 600 other followers who read and write about crypto. medium.com/@rickmulvey
Podcasts - To hear the top names in Bitcoin, and learn more than you could imagine, check out The Pomp Podcast with Anthony Pompliano, What Bitcoin Did with Peter McCormack, and The Wolf of All Streets Podcast with Scott Melker.
Issue No. 102, March 31, 2023
Rick Mulvey is a CPA, crypto consultant, and frequent contributor to Bitcoin Magazine. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.