Bitcoin’s mining power, or hashrate, is almost back to its highest ever level! This is great news for the Bitcoin network.
What is Hashrate?
Hashrate measures the total computing power used by Bitcoin miners. A higher hashrate means more miners are participating, or existing miners are expanding their operations. It’s a good indicator of how profitable people think Bitcoin mining is. A falling hashrate suggests miners are leaving the network, probably because it’s no longer profitable for them.
The Recent Surge
Recently, we saw a huge jump in Bitcoin’s hashrate, reaching a new all-time high. This happened at the same time the Bitcoin price soared. Why? Because miners’ income depends heavily on the Bitcoin price.
Miners get paid in two ways:
- Block Subsidy: This is a fixed amount of Bitcoin they receive for verifying transactions and adding new blocks to the blockchain.
- Transaction Fees: Users pay small fees to have their transactions processed quickly.
Historically, transaction fees have been a tiny part of miners’ income. The vast majority comes from the block subsidy. The block subsidy is fixed in Bitcoin, meaning its dollar value changes directly with the Bitcoin price. So, when the Bitcoin price goes up, miners earn more, leading to a higher hashrate.
A Temporary Dip and Recovery
Interestingly, even though the Bitcoin price kept rising after the initial hashrate spike, the hashrate dipped slightly. However, it’s now recovering and aiming for another all-time high.
Bitcoin Price Soars
Bitcoin’s price has also been on a tear, recently surpassing $102,000. This is great news for Bitcoin holders and miners alike.
