Bitcoin: the hashrate no longer grows

The hashrate of Bitcoin in recent days is declining. However, it is a contained and physiological decline, from which no particularly interesting indications can actually be drawn

However, it is worth highlighting it because recently a double top has occurred, and this is not so usual.

The double top of Bitcoin’s hashrate

The measurement of Bitcoin hashrate is actually just an estimate obtained through a retrospective calculation. Therefore, it should not be taken as a precise measure, and for analysis purposes, it is advisable to use the seven-day daily average, at least to reduce the “volatility,” which is inevitable in these estimates

According to the data calculated by Hashrate Index, the double peak was reached on June 14, at 945 Eh/s, and on July 27 at 944. In fact, the 940 Eh/s were also reached at the beginning of June and in mid-July.

The hashrate of the Bitcoin network is experiencing a slight decline, after the peak of 945 Eh/s. Source: Hashrate Index

Indeed, the seven-day daily average has been practically moving sideways since April 9, when for the first time in history it surpassed 920 Eh/s. Additionally, the 900 Eh/s mark was surpassed for the first time in history only on April 6

Note that previously the growth of the hashrate of Bitcoin had been practically uninterrupted since July of last year, but starting from April, the growth has stopped.

The reasons for the halt in the growth of Bitcoin’s hashrate

The hashrate of Bitcoin primarily grows as a result of the growth of the prezzo di BTC.

However, it takes a while to start growing, when the price of Bitcoin rises, and so between July and September of last year, it recovered the contraction of the previous months, but already from October, it began to rise towards new all-time highs, that is, even before the price surge due to the Trump-trade

It is very likely that the rise in hashrate in October was already a consequence of the price increase in the previous months, and when the Trump-trade started, with the price skyrocketing in a few days from less than $70,000 to more than $100,000. the hashrate then took months to align.

Thanks to the Trump-trade, Bitcoin experienced a price surge, resulting in an increase in hashrate. Source: CoinMarketCap

This initial phase of realignment to the new historical highs at the beginning of the year ended in February, but at the end of March, another one began, which ended in April

The curious thing is that there hasn’t been another one yet for the new all-time highs of the July price

Profitability

The problem, if one insists on identifying one, is profitability.

According to the estimates of BitInfoCharts, the profitability of Bitcoin mining has been more or less the same for over a month now, and this justifies the halt in the growth phase of the hashrate.

However, there is a very curious thing to highlight.

In fact, the current level of profitability would be perfectly in line with that of mid-November, when the price of Bitcoin was still below $100,000.

The fact is that the difficulty has increased a lot since then, which in fact certifies the increase in hashrate.

It is therefore possible that, if the difficulty has increased due to the increase in hashrate, but the profitability has remained the same, it means that many miners must have turned off old inefficient machines, replacing them with more efficient machines, thus increasing the hashrate but without reducing profitability

All this should actually be interpreted as a good sign, because if the miners invest, it should mean that their business is doing well

On the other hand, with a BTC price still close to all-time highs, it is more than obvious that professional mining is doing well at the moment

The impact on the price of BTC

It is often believed that the variations in Bitcoin’s hashrate can have effects on the price of BTC.

In reality, it is the exact opposite, because when the price of BTC rises, it is advantageous to turn on more mining machines (even the less efficient ones), and this increases the hashrate, while when the price falls, it is advantageous to turn off the less efficient machines, thus also decreasing the hashrate

What impacts the price of Bitcoin, however, are the sales of BTC by the miners

The miners earn only BTC, but the enormous amount of electrical energy they use must be purchased in fiat currency. Therefore, it is very common for a portion of the BTC they earn to be sold almost immediately to finance the mining activity

Often, however, a portion of the BTC they collect is placed in a wallet to hold for the medium/long term, yet this percentage varies depending on the health of mining

Therefore, the miners are struggling and sell more BTC, sometimes even depleting the reserves set aside in previous months, while when they are in profit, as now, they tend to accumulate as much as possible

In fact, at this moment the selling pressure of BTC on crypto exchanges is very low, and since the buying pressure, especially from the ETFs, remains good, the price of Bitcoin remains high