As Bitcoin continues to stay down for the count at around $8800 this morning, we get a new illustration of an important principle with new metrics in terms of Bitcoin’s current hash rate
William Suberg at Cointelegraph reports BTC hash rate hit an all-time high around 120 quintillion hashes per second yesterday, with some analysts putting up even bigger numbers as estimates.
A chart shows steady upticks in Bitcoin hash rate with almost even counterpoints the whole way across the board. There’s a waning in increases from around October to January, and then the overall average hash rate increase takes off again, while, as Suberg puts it: “miners shun (the) price drop.”
What this means, according to broad consensus, is that miners still feel it’s worthwhile to mine BTC even as the value drops.
“ past two years have been rocky for Bitcoin, and a major change on the horizon promises continued uncertainty,” wrote David Morris at Fortune about a week ago. “But investors still seem enthusiastic about the potential returns of Bitcoin “mining,” plowing millions into the increasingly massive arrays of high-power processors that securely track transactions and earn Bitcoin in return.”
Looking at the lack of correlation between hash rate and value, analysts are looking forward to this May when the halving of the Bitcoin block reward may trigger competitive activity among miners.
However, the key takeaway here for traders who have not understood the principle of hash rate analysis is that value does not track with hash rate. We’ve seen that, and it’s a mistake to think that these two values will always correlate.
A high hash rate can, though, signal certain kinds of network health.
“A high hash rate makes it more logistically difficult to coordinate the number of computers required for such an attack,” writes Matthew Beedham at TNW. “This is assuming that no one entity controls or owns a majority of the hash power of the network.”
Look for further changes in BTC metrics – and price! – to inform your crypto investment strategy.