On-chain data shows that Bitcoin mining hashrate has recovered significantly and reached a new all-time high (ATH) after experiencing a brief decline after the halving event.
Bitcoin's 7-day average mining power hits a record high
The Bitcoin network reaches consensus through a consensus mechanism called Proof of Work (PoW), in which miners compete using their computing resources for the right to add new blocks to the blockchain.
"Mining power" is an indicator that measures the total computing power contributed by miners to the Bitcoin network. It reflects the total amount of computing resources invested by miners to solve the Proof of Work problem.
When the value of this metric rises, it means that existing miners are expanding their facilities or new miners are joining the chain. Such trends indicate that these validators find the network attractive at the moment.
On the other hand, a downward trend in the indicator could suggest that some mining farms have decided to disconnect from the network, perhaps because they find mining on the chain no longer profitable.
Now, here’s a chart showing the trend of the 7-day average Bitcoin mining hashrate over the past year:
As shown in the chart above, the seven-day average Bitcoin mining hash rate has begun to decline after hitting a new all-time high last month. Just in the first few weeks of this month, the downward trend intensified, taking the indicator to significantly lower levels.
The metric’s sharp downward trajectory is attributed to a major event that took place on the network last month: the fourth halving, a periodic event that occurs every four years and permanently cuts the BTC block reward in half.
In Bitcoin mining, miners' income mainly comes from two aspects: block rewards and transaction fees. Block rewards are a fixed number of Bitcoins that miners receive when they successfully mine a new block. Transaction fees are small fees that users pay to miners to speed up the processing of their transactions.
Historically, transaction fees have been lower than block rewards. This is because block rewards are the main source of income for mining, while transaction fees are only a supplement. However, as the total amount of Bitcoin approaches its upper limit (21 million), block rewards will gradually decrease in the future until they eventually disappear. In this case, transaction fees will become the main source of income for miners.
It is not surprising, therefore, that some miners located in areas with high electricity costs and inefficient use of mining equipment will disconnect as the economic effects of the halving become apparent.
The impact of Bitcoin halving on miners’ income
However, a question arises here: considering that Bitcoin has already experienced three halvings in history, if miners’ income continues to decrease, how can mining computing power continue to climb and reach new highs?
Two factors may explain this phenomenon. First, mining equipment has become more efficient over time, allowing miners to run higher hashrates while consuming less energy.
Another key factor, and perhaps even more important, is that the overall price trend of Bitcoin has been upward throughout its history. Although the block reward is fixed in terms of Bitcoin value before the halving, its value converted to USD changes with the fluctuations of the market spot price. This means that even though the halving results in a decrease in the number of Bitcoins per block, if the market price of Bitcoin rises, the total revenue of miners may still increase.
Round after round, price increases have helped offset the impact of the revenue losses for miners caused by the halving. Recently, prices have shown some recovery, and as can be seen in the hash rate chart, the metric has also recovered along with the price.
Apparently, miners were pleased with the increased profits brought about by the price recovery and therefore increased their computing resources, bringing the mining hashrate to a new all-time high.
At the time of writing, Bitcoin is trading at around $68,750. $BTC
Conclusion:
Overall, despite the challenges that Bitcoin mining faces from the halving event, miners have been able to adapt to these changes and continue to expand their mining capabilities due to advances in mining technology and the volatility of Bitcoin prices. This combination of adaptability and technological advancement has enabled Bitcoin mining hashrate to not only return to pre-halving levels, but also hit new all-time highs. In the future, as the Bitcoin economy and technology further develop, we can expect the mining ecosystem to continue to demonstrate its complexity and dynamic changes. #比特币 #挖矿算力 #减半
