On Nov. 9. 2020, Bitcoin’s hash rate reached 157.5 exahashes per second (EX/s) as per data from Coinwarz, marking a 42% increase in the span of two days. This surge means that the speed at which BTC miners can process transactions and solve the block reward puzzles is increasing rapidly post halving.
BTC Hash Rate Spikes Higher | Source Coinwarz
The hash rate reached an all-time high of 162.263 Ex/s on Oct. 18 before dropping after the end of China’s Sichuan mining center’s rainy season.
Quantum Economics analyst Jason Deane alerted the crypto community to the current spike in the BTC hash rate in a Nov 9 tweet. He suggested that the sudden surge could be attributable to more Chinese miners resuming operations at other mining hubs such as Xinjian and Inner Mongolia.
An increase in the hash rate could likely result in another significant difficulty tuning on the Bitcoin network. The mining difficulty recently saw an adjustment of minus 16% following the exodus of miners from Sichuan. That was the second-largest downside correction in BTC history.
How Will the Hash Rate Impact BTC Prices?
A high hash rate typically indicates a healthy mining environment. It shows that miners are directing more mining power into the BTC network and can better compete to solve the block reward puzzles.
According to outspoken Bitcoin advocate Max Keiser, the BTC hash rate is an interesting metric that can offer wider macro insight and measure BTC adoption.
Keiser claimed that the BTC price follows the hash rate in a 2019 tweet.
“Hashrate (more often than not) leads price. This is something not even #Bitcoin’s most ardent supporters understand. It’s the heart of the incentive scheme,” the Bitcoin evangelist explained.
Investors should now watch if the hash rate continues to hit new highs in the coming weeks and months. If this scenario plays out, then crypto enthusiasts can look forward to seeing a new all-time high in the price of Bitcoin soon.
Miners Invest in Newer Generation Mining Hardware
The third Bitcoin halving event that took place a few months ago slashed block rewards in half, forcing many miners to capitulate as their profit margins dropped drastically.
However, large miners continued to retain long-term faith in the investment opportunity offered by the BTC network. Instead of closing shop, miners chose to purchase better hardware that reduces operational costs in hopes that they would eventually participate in the digital gold rush.
For instance, Riot Blockchain, Inc. purchased an additional 2,500 next-generation S19 Pro Antminer machines as the company targets to quadruple its hash rate by 2021. Many more miners have followed suit, purchasing more modern and efficient equipment that allows them to remain competitive.
As a result, the hash rate has flooded back into the BTC network and has trended upwards for almost six months. This increasing hash rate demonstrates a renewed fundamental faith from the Bitcoin mining community that their endeavors will remain profitable.