Bitcoin may only be holding steady at about half of its $20,000 peak from 2017, but new reports are showing underlying fundamentals are making investors more bullish on this top trading cryptocurrency.
Information from Blockchain.com shows Bitcoin’s hash rate exceeding 70 terahash per second July 20.
As analysts point out, that’s eight times the computing power Bitcoin had in 2017 when it soared up to its highest value point to date.
So many less sophisticated traders only pay attention to Bitcoin values – but in the background, experts and industry leaders are looking at things like hash rate and mining rewards to build a better picture of what Bitcoin’s future looks like.
The increased hash rate as a descriptor of mining activity affects how miners get rewards for Bitcoin, as Wolfie Zhao points out at Coindesk.
“Bitcoin is designed to adjust its mining difficulty every 2,016 blocks based on the amount of computing power deployed to the network,” Zhao writes. “This is done to ensure the block production interval at the next period will remain constant at around every 10 minutes. When there are fewer machines racing to solve math problems to earn the next payout of newly created Bitcoin, difficulty falls; when there are more computers in the game, it rises. Right now the machines are humming furiously.”
As Zhao notes, with more than 2 million units of mining equipment being newly connected over the past few months we’re likely to see new activity in Chinese mining firms and other stakeholders around the world.
It’s interesting to contrast this scenario to the one we faced after Thanksgiving last year when Bitcoin was really tanking – when value was down so low that analysts were perceiving negative capex.
This Medium piece by Christopher Bendiksen goes into explaining why it still makes sense for miners to pursue Bitcoin even if they’re not meeting operating expenses – TLDR: they’ve already invested in the gear.
By contrast, today’s situation is pretty rosy for miners, and it’s likely that will continue to see activity expand.