On Christmas Day, the computational power of the Bitcoin network, also known as the mining hash rate, reached a new all-time high. However, this has further increased the amount of strain that miners are under amid a decline in profitability.
Following Blockchain.com, the hash rate of Bitcoin achieved an all-time high of 544 exahashes per second (EH/s) on December 25. Bitinfocharts validated the data, proving that the average hash rate reached its highest point throughout the weekend.
This comes at a time when network hash rates have increased by more than a hundred percent since January, rising by more than double. Since January 1, 2023, the price of the asset has climbed by more than 150%, effectively mirroring the chart.
A chart depicting Bitcoin’s hash rate over the course of 2023. Source: Blockchain.com
This gain has occurred over the same period as Bitcoin hash rates have been increasing. Will Clemente, co-founder of Reflexivity Research, examined the hash rate using a logarithmic scale and made the following observation.
“The summer 2021 China mining ban is barely a blip,” stated Clemente. “Imagine fading the most secure decentralized open-source monetary network on the planet; it couldn’t be me.”
A high hash rate benefits theoretical price models like the implied hash-adjusted price, but it requires miners to exert more effort in securing the next block.
The BRC-20 ordinal inscription fever has subsided over the past week, which has resulted in a decline in the price of hash, which is a measure of profitability. Based on the information provided by HashrateIndex, the price of a hash is now $0.09 per terahash per second per day.
Since reaching its all-time high of $0.136/TH/s/day on December 17, 2023, profitability has dropped by 34%. When there is a surge in demand for hash, the price of hash frequently increases, which results in large transaction costs. This was the case during the recent inscription frenzy.
The Glassnode analyst known as “Checkmatey” observed that “we are approaching almost an entire year without fully clearing Bitcoin mempools.” This is because increasing fee pressure has been there since February.
Bitcoin hash price ($/TH/s/day) 1 month. Source: Hashrateindex
According to a report, the first time that network hash rates surpassed the significant 500 EH/s threshold was in late November itself.