In 2023, the Bitcoin hashrate has surged by a staggering 130% which shows growing competition and reduced profitability for miners.
The computing power of the Bitcoin network, also known as the mining hashrate, hit a record high on Christmas Day, adding to the challenges faced by miners in the wake of declining profitability.
Blockchain.com reported that on December 25, Bitcoin’s hash rate achieved an unprecedented level of 544 exahashes per second (EH/s), a data point corroborated by Bitinfocharts, which recorded an average hash rate peak over the weekend.
This development occurs against the backdrop of a substantial increase in network hash rates throughout the year, surging by 130% since January.
During the same timeframe that BTC hash rates have surged, the asset’s price has closely followed suit, experiencing a gain of over 150% since January 1, 2023.
Will Clemente, co-founder of Reflexivity Research, analyzed the hash rate on a logarithmic scale and remarked, “The summer 2021 China mining ban is barely a blip.” He added, “Imagine fading the most secure decentralized open-source monetary network on the planet, couldn’t be me.”
While a high hash rate may be beneficial for theoretical price models like implied hash-adjusted price, it poses challenges for miners who now face increased competition to secure the next block. The hash price, a metric indicating profitability, has declined in the past week due to a waning interest in BRC-20 ordinal inscription. As of now, the hash price stands at $0.09 per terahashes per second per day, according to HashrateIndex.
Profitability has experienced a 34% decline since reaching its peak of $0.136/TH/s/day on December 17, 2023. Hash price tends to surge during periods of increased demand, leading to elevated transaction fees, as seen in the recent frenzy of inscriptions.
Bitcoin ETF Update Deadline
In another development, those seeking approval for a spot Bitcoin exchange-traded fund (ETF) must complete their filings within the next few days to adhere to the impending deadline set by the United States Securities and Exchange Commission (SEC).
The SEC has stipulated that applicants for spot Bitcoin ETFs must submit final S-1 amendments by December 29, as reported by Reuters, based on information from public memos and individuals familiar with the discussions.
The anticipated approval of a Bitcoin spot ETF by the SEC is a pivotal development, poised to attract significant institutional capital. If realized in 2024, experts project over $240 billion flowing into Bitcoin in the first year post-approval. This influx, coupled with diminished selling pressure from miners, may drive a substantial price surge, potentially pushing Bitcoin into six-figure territory. Despite the positive outlook, concerns persist about heightened volatility with increased involvement of traditional market players in Bitcoin’s dynamics.
Adding to the intrigue is Bitcoin’s impending block reward which is scheduled for April 2024. This event halves the bitcoins rewarded to miners, reducing supply issuance. Historically, such halvings have sparked significant price surges, creating a favorable supply-demand imbalance in favor of buyers.