12 Sep 2022
Bitcoin’s hashrate reaches all-time high
Bitcoin’s 7-day average hashrate has surged to an all-time high as the public mining companies plug in their new machines.
The hashrate’s prior all-time high was in early June after a slow and steady growth since the summer of 2021. The hashrate suddenly started falling in June as miners unplugged their machines due to a heatwave in the U.S. that led to soaring electricity demand. The U.S. currently hosts around 40% of Bitcoin’s hashrate.The public bitcoin mining companies are awaiting enormous deliveries of mining rigs in the coming months. Some of them, like Marathon, already have thousands of mining rigs in storage waiting for hosting space and aim to plug in 6.9 EH/s over the next three months. Riot Blockchain has plans to plug in an additional 4.5 EH/s in 2022, while Core Scientific plans to deploy around 4.4 EH/s.Due to the enormous hashrate growth plans of the public mining companies, we expect the hashrate at the end of this year to stand close to 245 EH/s. This estimate is, of course, very dependent on the bitcoin price development. If the bitcoin price keeps increasing towards $30k, we might see some older generation mining rigs coming online again, which could lead the hashrate to reach 260 EH/s.A symptom of the rapid hashrate growth is the high block production rate. Over the past seven days, miners have churned out 6.28 blocks per hour, significantly above the target of 6. The Bitcoin network will likely increase its difficulty by 3.2% later today, in the fourth upwards difficulty adjustment in a row.All these upwards difficulty adjustments pressure miners’ profit margins. With difficulty sitting at an all-time high, bitcoin miners are severely vulnerable to a significant drop in the bitcoin price, particularly those with the least liquid balance sheets.