This Christmas marked a significant milestone for the Bitcoin network, as it achieved a record-breaking mining power of 544 exaHashes per second (EH/s). This impressive feat represents a doubling of the network’s computing power since the beginning of the year, reflecting a growing robustness and resilience in the system.
Despite the festive season, the Bitcoin community had more than just holiday cheer to celebrate. The network’s hash rate, a measure of its processing power, surged, indicating heightened activity and interest in Bitcoin mining. This increase is particularly noteworthy considering the challenges faced by the network, including the 2021 China mining ban which had a substantial impact on global mining activities. Will Clemente from Reflexivity Research highlighted this growth as a testament to Bitcoin’s enduring appeal and strength.
The surge in the network’s hash rate, however, has had a mixed impact on the Bitcoin ecosystem. On one hand, it showcases the increasing security and robustness of the Bitcoin network, making it more resilient to attacks and fraud. On the other hand, this growth has intensified competition among miners. As more miners join the network and the difficulty of mining Bitcoin increases, individual miners find it harder to earn Bitcoin rewards. This competition has led to a decrease in miner profitability. The hash price, which reflects the earnings for each unit of mining effort, has dipped to just $0.09 per terahash per second per day, a 34% decline since December 17.
This drop in profitability can be partly attributed to the cooling of the BRC-20 ordinal inscription trend, which had previously spurred demand and increased transaction fees. The decline in this trend has impacted the financial incentives for miners. Despite these challenges, the Bitcoin network has maintained a high level of activity. Glassnode analyst “Checkmatey” pointed out that the network has been dealing with a consistently full mempool, indicating that it has been processing a large volume of unprocessed transactions for almost a year. This situation has kept the fee pressure elevated, as users pay more to prioritize their transactions.
The journey to this record hash rate began earlier in the year, with the Bitcoin network’s hash rate first crossing the 500 EH/s threshold in late November. This milestone was a precursor to the record-breaking figures seen on Christmas, marking a year of significant growth and resilience for the Bitcoin network.
This development in the Bitcoin network is a reflection of the dynamic nature of the cryptocurrency world. The increase in the network’s computing power, coupled with the rise in Bitcoin’s price, which has soared by over 150% since the start of the year, paints a picture of a vibrant and evolving digital currency landscape. However, the challenges faced by miners, including reduced profitability and intense competition, serve as a reminder of the complex interplay of factors that drive the cryptocurrency market. As the Bitcoin network continues to grow and adapt, it remains a barometer of the broader trends and shifts in the world of digital currencies.