Bitcoin’s hashrate recovered from the draining effects of China’s crypto mining ban in December 2021. The network has already regained its hashrate, hitting an all-time high of 208 million EH/s on January 1st, with more growth projected in 2022.
The hashrate of Bitcoin is a measure of the computational power utilized to validate and process network transactions and produce new currency.
In simple terms, a hashrate indicates the number of miners participating in the network at any given time. It is thought to be strongly tied to blockchain security: the higher the hashrate, the greater the security.
It is commonly stated that hashrate levels follow price because when the BTC reward is larger, more cryptocurrency miners flock to the network.
According to Arcane Research, the anticipated mining pace has reached an all-time high, surpassing the 191 EH/s in May 2021. The hashrate is projected to rise further as the major mining companies invest millions in additional devices.
This could become BTC’s next bullish trend, as the rise in the value of hashrate measures demonstrates the profitability of BTC mining and may attract more miners to the blockchain.
The graph below depicts the trend of Bitcoin hashrate from December 2020 to the beginning of January 2022:
Last year, China prohibited all crypto mining operations, which significantly impacted the mining business. The country accounted for more than 70% of all crypto-mining activity worldwide, and the crackdown caused the China hashrate to plummet to zero.
China’s crypto miners, therefore, began looking for new locations to undertake crypto mining activities in a safe and energy-efficient manner. Month after month, the industry rose as they resettled, and the hashrate began to return to its all-time high.
When the bitcoin hashrate plummeted following China’s ban, there was concern that the network would no longer be secure.
However, the digital coin had seen lower hashrates of 9.8 million terahashes per second in 2017, so the massive reduction to about 128 million terahashes per second in 2021 was not jeopardizing Bitcoin or its safety; it was simply a temporary slowdown. And it’s on its way back up.
In July 2021, mining businesses congratulated the Chinese crackdown for the 54% decline in bitcoin’s hashrate, as miners who remained connected to the network were expected to make more money.
“They suddenly hold a significantly greater slice of the pie, which means they earn more bitcoin every day,” engineer Brandon Arvanaghi told CNBC.
Last year, bitcoin mining in the United States began to expand, with a big amount of new cash from venture capital investments ready to absorb errant hashrate and gain from the movement of Chinese miners.
Now, the BTC hashrate is well-positioned once more and is projected to expand further since mining businesses have been purchasing big amounts of hardware to be delivered this year, and so activity will increase proportionately.
Marathon Digital Holdings is one of the largest mining businesses right now. They have ordered new equipment from Bitmain worth $900 million – the largest single order for Bitmain yet–intending to increase their hashrate 23.3 EH/s by 2023 with around 199,000 units.
According to the Arcane Research research, BTC transaction costs per day have climbed by 25% in the last seven days after being relatively subdued around Christmas.
Similarly, the average transaction value grew by 11%. This statistic represents the average fee in USD for processing and confirming Bitcoin transactions. When the network becomes overloaded, the rates tend to rise.
As so, this is an indication of traders returning to the game after BTC experienced “an abnormally drowsy Christmas.”
In the prior statistics, we can see that daily miner revenues have dropped by 8% in the last seven days, following a 5% drop in BTC price, indicating that the year is off to a poor start.