03 Oct 2022
Bitcoin’s hashrate surges to a new all-time high
Bitcoin miners keep getting squeezed from several angles as the hashrate reaches an all-time high simultaneously as the bitcoin price stays depressed and energy prices soar.
Bitcoin mining is a cyclical industry. During the good times, miners heavily invest in new mining infrastructure that takes several months to get operational. This phenomenon leads the hashrate to lag the bitcoin price. The hashrate miners decided to get online when times were better in late 2021, and early 2022 started to come online around July. Since then, hashrate has surged to an all-time high while the bitcoin price has fallen like a rock.The ten biggest public miners combined added 8.1 EH/s of capacity in August alone, and they will keep growing their hashrate considerably as they await massive machine deliveries later this year. Still, it’s unlikely that the hashrate will surpass 260 EH/s in 2022.The hashrate surge has led the block production rate to reach 6.45 blocks per hour, among the highest we have seen this year and far above the target of 6. As a result, the Bitcoin network will likely undergo a vast increase in mining difficulty in about one week.Mining economics are already under heavy pressure due to a depressed bitcoin price and growing energy prices. Soaring difficulty at the same time could be a setup for a perfect storm in the vulnerable bitcoin mining industry.While the hashrate is in the spotlight this week, several other things are happening on-chain. We mainly see a 12% growth in the daily transaction volume, primarily driven by an 8% increase in the average transaction size. Such on-chain transaction increases are usual during periods of surging bitcoin spot volume, as holders increasingly send bitcoin back and forth between exchanges.