The Bitcoin mining boom is quietly going parabolic
Bitcoin (BTC) may be struggling with $30,000, but under the hood, all-time highs of a different kind keep coming.
The latest data shows that Bitcoin network fundamentals – difficulty and hash rate – will hit new records this week.
Bitcoin mining difficulty, hash rate refuses to slow down
Bitcoin’s 2023 recovery has been about more than just BTC price action, with miners seeing a significant reversal of their own.
As BTC/USD added 70% in Q1 alone, miners pressed for some much-needed relief after the bear market pushed profit margins to virtually zero.
The comeback for miners is evident in difficulty level, which reflects competition for block subsidies among other things.
This has been setting new records for the past two months, and this week will be no exception. According to data from BTC.com, the difficulty will increase by about 2.1% on April 20, reaching 48.91 trillion.
The staggering number is a whopping 13 trillion higher than at the start of the year alone.
In addition, Bitcoin network hash rate is estimated to be higher than ever, with raw data from MiningPoolStats etching a new all-time high of 418 exahashes per second (EH/s) on April 18.
As Cointelegraph reported earlier this week, hash rate estimates are far from concrete and can be misleading, with talks now emerging to rethink how it is measured and reported by those looking to draw positive conclusions about BTC price strength.
However, as the old saying goes, “price follows hashrate”, and some commentators continue to closely monitor the metric as it drifts ever higher.
A key focus is Russia, which has ramped up mining activity in the past year to become the world’s second-largest miner by 2023, according to a report in the Russian-language Kommersant news agency.
While this has led to concerns that governments with a majority hash rate share can pressure miners to censor transactions, others believe that the real “danger” is using that hash rate for its intended purpose – to earn Bitcoin.
“Opponents hypothetically using hashrate to censor #btc transactions are a distraction from opponents actually using hashrate to earn #btc revenue,” Pierre Rochard, Vice President of Research at Riot Platforms, wrote in a recent commentary on the subject.
Bitcoin miners are not yet hoarding BTC
A look at the current state of miner balances, meanwhile, shows that BTC sales are increasing on a rolling 30-day basis.
Related: What is Bitcoin hash rate and why does it matter?
On April 18, miners reduced their Bitcoin holdings by 648 BTC compared to a month ago, according to data from Glassnode.
The changes are significant compared to sales that accompanied the FTX implosion in Q4 last year.
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This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making a decision.
