May 26, 2024
Bitcoin Achieves Hash Rate Peak, But Faces Declining Profitability
Bitcoin News

Bitcoin Achieves Hash Rate Peak, But Faces Declining Profitability

The Bitcoin network hash rate has achieved a new pinnacle, surpassing 540 exahashes per second, marking an all-time high. Despite this, miners face heightened pressure due to diminishing hash prices and profitability.

On Christmas day, Bitcoin’s hash rate reached an unprecedented 544 exahashes per second, as reported by Blockchain.com and confirmed by Bitinfocharts. This surge reflects a notable escalation, with network hash rates surging by over 130% since January of the same year.

Interestingly, the increase in BTC hash rates mirrors the asset’s price movement, soaring by more than 150% since the beginning of 2023. Reflexivity Research co-founder Will Clemente, analyzing the hash rate on a logarithmic scale, downplayed the impact of the 2021 China mining ban, stating, “The summer 2021 China mining ban is barely a blip.”

While a high hash rate contributes to theoretical price models, it poses challenges for miners striving to secure the next block. Hash price, a crucial profitability metric, has seen a decline over the past week, currently standing at $0.09 per terahashes per second per day, according to HashrateIndex.

Profitability has receded by 34% since its 2023 peak of $0.136/TH/s/day on December 17. The drop in hash price is linked to the waning enthusiasm in the BRC-20 ordinal inscription trend. The recent inscription frenzy led to elevated transaction fees, causing hash price spikes.

Glassnode analyst “Checkmatey” noted the sustained pressure on Bitcoin mempools, observing, “We’re approaching almost an entire year without fully clearing Bitcoin mempools, having sustained elevated fee pressure since Feb.”

The milestone of surpassing 500 EH/s in network hash rates was initially achieved in late November. The continuous surge in hash rates emphasizes the robustness and security of the Bitcoin network, although miners contend with the challenges of increased competition and reduced profitability amid a dynamic market environment.

Image by Freepik

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