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Bitcoin Network Fundamentals Could Sustain $265,000 Price, CryptoQuant CEO Explains

The CEO of analytics firm CryptoQuant has explained how the Bitcoin network fundamentals could support a market cap three times the current size.

Bitcoin Hashrate/Market Cap Ratio Could Reveal Ceiling For Cycle

In a new post on X, CryptoQuant founder and CEO Ki Young Ju has talked about what the network fundamentals could reveal about how much more market cap Bitcoin can sustain.

BTC is a cryptocurrency that runs on the proof-of-work (PoW) consensus mechanism, meaning that validators called miners compete with each other using computing power to get the chance to add the next block to the blockchain.

Miners have to pay constant electricity costs to run this computing power. Generally, these chain validators do so by selling their block rewards. These rewards are fixed in BTC value and given out at a more or less constant rate, so the main variable in miner finances is the asset’s USD value.

Mining-related economics are very much related to the cryptocurrency’s price. A metric central to the miners is the Hashrate, a measure of the computing power this cohort has connected to the Bitcoin blockchain.

Below is a chart that shows the trend in the 7-day average value of this BTC indicator over the past year.

Bitcoin Mining Hashrate

As the graph shows, the Bitcoin Hashrate has been riding an uptrend during this period, largely due to the rally that the asset’s price has enjoyed in this window.

To relate this fundamental metric with the price of the asset, the CryptoQuant CEO has referred to the “Hashrate/Market Cap Ratio,” which is an indicator that keeps track of how the market cap (that is, the total valuation) of the cryptocurrency compares against its Hashrate.

Here is the chart shared by Ju that shows the trend in this metric over the last few years:

Bitcoin Hashrate/Market Cap Ratio

The graph shows that the Bitcoin Hashrate/Market Cap Ratio has been at low levels compared to the highs the metric achieved during the 2021 bull run.

This is despite the fact that the asset’s price is currently at similar levels to back then. The reason behind this trend is that the network’s Hashrate is now more than three times what it was then.

If the ratio’s high from the previous cycle top is where the cycle peak will also be observed this time around, then it means that the asset’s market cap could increase over three times from its current value.

Based on this, Ju suggests that the current network fundamentals could potentially sustain a price of $265,000.

BTC Price

At the time of writing, Bitcoin is trading at around $62,300, up more than 9% over the past week.

Bitcoin Price Chart

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Bitcoin Hashrate Hits New All-Time High Amid Spot ETF Frenzy

Bitcoin’s hash rate, that is the network’s computing power, recently reached a new all-time high amidst the frenzy that came with the debut of spot Bitcoin ETFs in the US. According to data from IntoTheBlock, the Bitcoin hashrate reached an all-time high of 630.91 million TH/s or 630 EH/s on January 11, less than 24 hours after the U.S. Securities and Exchange Commission approved 11 Spot Bitcoin ETFs in the country.

Bitcoin Hashrate Reaches Record Highs

The hashrate measures the total combined computational power used to mine new bitcoins and process transactions. The Bitcoin mining hashrate has been on a steady rise since 2021 irrespective of market sentiment, be it bullish or bearish, cementing Bitcoin as the most secure cryptocurrency network. Based on the information provided by Coinwarz, the hashrate started 2023 at 266 EH/s and ended the year at 598 EH/s, a 125% growth. 

The hashrate spiked further to an all-time high of 630 EH/s on January 11, and the timing was no coincidence. The surge in hashrate came right after the SEC approved the first US Bitcoin Spot ETFs to open the doors for mainstream investors to invest in the top crypto without actually owning the asset.

https://x.com/intotheblock/status/1745826801106956323?s=20 

As expected, the approval of these ETFs led to a frenzy of activities in Bitcoin, pushing its on-chain volume to its highest since the collapse of crypto exchange FTX. Consequently, the hashrate also increased, indicating miners are ramping up operations in anticipation of increased interest and trading volume that often follows the launch of new ETFs.

BTC Price And Mining Profitability Fall

The approval of spot ETFs is a sign of mainstream acceptance that strengthens Bitcoin’s credibility. Despite the increase in trading volume and growth of the network, Bitcoin’s price seems to have deviated from this positive trend. The crypto’s price initially reacted positively to the approval of the spot ETFs, pushing it over $48,600, its highest point since April 2022. In a dramatic turn of events, this spike has since reversed, to give the notion of a “sell the news event.” 

At the time of writing, Bitcoin has retraced 11% from this local high and is trading just above $43,000. Trading volume has also fallen by 62% in the past 24 hours.

Bitcoin mining profitability, which saw steady growth in December has failed to react positively to the approval of spot ETFs. According to data from Hashrateindex, the drop in Bitcoin prices led to mining profitability falling to as low as $0.07958 per terahash/second per day on January 13th, a 22% decline from $0.10270 per terahash/second per day on January 1. 

Featured image from iStock

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By The Numbers: Bitcoin Hashrate Poised To Complete 100% Growth In 2023

As analysts continue to debate the future of the flagship cryptocurrency, Bitcoin, the network’s hashrate has seen exponential growth, with this key indicator poised to experience an 100% increase (from the beginning of the year) before the year runs out. 

How Bitcoin’s Hashrate Has Grown

The hashrate, which is used to measure the computational power used to mine and process transactions on the network, currently (at the time of writing) stands at 445 exahashes per second (EH/s). This figure represents a significant increase, considering that the network hashrate stood at 255 EH/s on January 1, 2023. 

Bitcoin hashrate

These figures mean that the network hashrate has grown by 190 EH/s since the year began, and at this rate, it could well hit 510 EH/s by the end of the year, signaling a 100% increase from when the year began. These figures also suggest that more miners have jumped on the Bitcoin blockchain, with it being faster and more secure as a result of this. 

At this rate, the hashrate could also well be on the way to fulfilling some of the predictions made by analysts. In March, A research analyst at River Financial, Sam Wouters, noted the impressive growth rate and predicted that Bitcoin’s hashrate could reach a “Zettahash by the end of 2025.” A Zettahash is equivalent to 1,000 EH/s.

Going by this current rate, some have noted that Wouters’ prediction could become a reality by December 23, 2025, or the beginning of 2026.

Despite this significant growth rate, it is worth mentioning that Bitcoin’s hash price has remained rather tepid during this same period. Hash Price refers to the revenue generated by miners on a per tera-hash basis. 

The hash price currently stands at close to $60, almost the same figure as at the beginning of the beginning of the year. Notably, Miners’ biggest payday came on May 8, 2023, when the hash price was $125. 

Where The Bitcoin Hashrate Is Coming From

In his tweet back in March, Wouters also tried to analyze where the growth in Bitcoin’s hashrate could be coming from. He shared his belief that it was unlikely that the added hashrate was coming from nation-states, as some people may suggest. According to him, the odds of nation-states providing computing power to the network and remaining a secret is low as “there are far too many people involved in running massive operations.”

He concluded by stating that the source of the added hashrate was “nuanced” as it could simply be a result of factors like new models being put on the market, unused inventory going online, more facilities going live, and also entrepreneurs who are finding cheap sources before regulators step in. 

Bitcoin price chart from Tradingview.com (Hashrate mining)

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Diamond In The Rough: Solo Bitcoin Miner Secures $160,000 Block Reward

On August 18, a solo miner managed to solve block 803,821, securing a remarkable 6.25 Bitcoin block reward valued at $160,000. This is a very rare event as lone miners have a lower chance of mining a block due to the increase in mining difficulty and this solo miner became the 277th solo miner in bitcoin’s history to achieve this. 

Solo Bitcoin Miner Makes History

The solo miner was able to pull off this remarkable achievement using the Solo CKpool mining service. The miner identified with the tag bc1q2za4ejga366sn288273pty8trasn5zs4y9hqg6 used an S17 Bitcoin Miner with a hash power of roughly 1 PetaHash which is way lesser than most BTC mining entities, as was speculated by Con Kolivas, the administrator of Solo CKpool.

Perhaps the most interesting thing about this development is that the miner achieved this remarkable reward when mining difficulty was almost at an all-time high of 52.39.

Normally, mining Bitcoin with just 1 PetaHash seems impossible compared to other BTC solo miners that were able to pull this off in the past who had hash rate capacity in exa-hashes.

It is almost impossible for a solo miner to solve an entire block on their own, due to the increased popularity of BTC mining and the persistent rise in the network hash rate and powerful mining equipment. 

BTC miners are required to input computational power to solve and add the next Bitcoin block to the network, which creates a valid block hash while using the computational power of multiple mining rigs.

However, since the miner was using the Solo CKpool, it allows miners with outdated or inefficient equipment to pool their mining power together, increasing their chances of solving a block, which is what happened here. In their case, this miner was able to retain 98% of the reward. 

Bitcoin price chart from Tradingiew.com

The miner now joins two other solo miners who have been able to achieve this impressive feat in March and June this year using a Solo CKpool and is the third time this is happening so far in 2023.

Rise In Hashrate Triggers Surge In Mining Difficulty

Over the last few months, the Bitcoin hashrate has been rising rapidly, eventually hitting an all-time high in July. In response to this, the mining difficulty surged quickly and touched its own ATH in the same month.

By July 8, the Bitcoin mining hashrate was at 538.05 EH/s and difficulty surged to 53.9112T a few days later on July 12. However, since then, it has tapered off with hashrate dropping 26% to 424.76 EH/s and difficulty dropping around 3% to 52.39T.

Bitcoin mining difficulty

Nevertheless, both the Bitcoin hashrate and difficulty are significantly higher compared to the start of 2023, which makes the solo miner’s achievement even more impressive. However, as hashrate and difficulty continue to rise, such occurrences are expected to be fewer as miners with large hashrates dominate the market.

In the end, the winner is the Bitcoin network which becomes stronger for it with the increased hashrate. It is also beneficial to BTC investors as a rise in hashrate suggests there is more interest in the digital asset and this can convert to higher prices for the cryptocurrency.

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Bitcoin Miners Reap Profits As Mining Difficulty Hits 3-Month Low

Bitcoin miners have received a boost in profits after the scheduled difficulty level adjustment resulted in a positive balance. This is the first time since February that the difficulty, which controls the issuance of coins on the network, has decreased. Recent data from Braiins showed that Bitcoin computing power experienced a drop of over 45+ EH/s between April 20 and 28. However, this trend has been reversed with the increase in miner profits over the last week.

Despite the recovery of the hashrate to 350 EH/s, it was not sufficient to prevent a 1.45% difficulty adjustment retracement, as stated by Mempool.space. Currently, the mining difficulty level is at 48T (trillions).  This change in difficulty level affects the miners’ profitability, as less competition for the reward means increased estimated income for those still connected to the network.

Bitcoin Hashprice has experienced a rapid rise in the past 2-weeks: source braain

Bitcoin Miners Profit As Hashprice Increases

The current price for Bitcoin hashpower rose to 0.088 USD/TH/day (88 USD/PH/day), up from 0.077 USD/TH/day (77 USD/PH/day) on May 2. This 11.49% increase over three days is a positive development for Bitcoin miners, indicating increased profitability for their operations. The hashprice is a crucial metric for calculating the profitability of a mining operation, representing the value assigned to a unit of computation in dollars per terahash or petahash per day. While the cause of the significant hashrate drop last week is uncertain, the current state of the network justifies the quick reconnection of miners. 

Bitcoin transaction fees have spiked in recent days: source @braain

Recently, there has been increased interest in BRC-20 tokens, which are used to create memecoins, leading to network congestion in Bitcoin within a few days of their release. As recently reported, this could be a possible factor in the hashrate drop. As a result of this high activity on the network, the fees are now making up 12.4% of the miners’ revenue. 

Related Reading: Bitcoin Breaks Out: Experts Predict $36,000 Target As Market Outlook Remains Positive

Bitcoin Commissions Rise After New Ordinals Record 

In the wake of the rising interest in tokens that can be registered to Bitcoin through Ordinals, the value of transaction fees paid by Bitcoin users has surged. Within a single day, the average transaction fees have more than doubled. As per the data from Mempool.space, the current transaction fees range from 70 sat/vB to 100 sat/vB. This implies that a transaction of 140 vB (median) would require payment of almost $4 USD to get confirmed within the first few minutes.

Average Bitcoin transaction fees have increased due to surge in Ordinals: source @mempool

Note that the sudden interest in tokens registered through Ordinals is responsible for the backlog of transactions that need confirmation, leading to a surge in average commissions. According to Murch, a Bitcoin developer, the mempool depth has reached 104 blocks despite having 8 blocks per hour for the last six hours. The rise of Ordinals NFTs has not been without controversy, as some Bitcoin maximalists blame this trend for the increased transaction fees that have resurfaced in recent months. 

Related Reading: Former DoJ Kennedy Jr, Laments on Global Financial Censorship, Shows Support For Bitcoin

Bitcoin Price Analysis

At the time of writing, Bitcoin is trading around $29,000, up 2% in the last week.

Bitcoin has been trading sideways in recent days: Source @tradingview

Featured Image from iStock.com, charts from Braain.com, Mempool.space and Tradingview.com

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Why The Bitcoin Mining Hashrate May Not Be Out Of The Woods Just Yet

The bitcoin mining hashrate took a sharp nosedive as a historical storm tore through multiple US states. This saw power grids consolidate power to be able to provide enough energy for residents to heat their homes and some mining operations had to wind down to free up more of the electrical. There has been an increase in the hashrate since then but the worst may not be over yet.

Bitcoin Hashrate Takes A Beating

Electricity grids across the United States came under immense pressure as the country recorded one of its coldest winters yet. Temperatures dropped drastically across various states and the electricity grid was stretched thin to provide enough energy to heat homes. As a result, a number of bitcoin miners decided to pause their operations to free up some energy and this affected the hashrate contributed by the country.

By Christmas Day, the global hashrate had tanked almost 40%, dropping from its Dec. 24 peak of 276 exahashes per second (EH/s) to 175 EH/s. However, there was a 39% increase in hashrate on the same day which brought it back up to around 244 EH/s.

Bitcoin mining hashrate

Since then, the hashrate has continued to wobble day to day and has now dropped back to the 212 EH/s level once more. This shows that while miners may have turned some of their machines back on, they may be shutting them down once more as the extremely cold weather persists.

How Long Will This Last?

Winter storm expert for Atmospheric Environmental Research Judah Cohen said that the Arctic blast currently being experienced in the United States should be short-lived and last about a week before temperatures begin to return to normal. 

Bitcoin price chart from TradingView.com

However, this still leaves a couple of days before it is expected to completely subside. This is evidenced by the zig-zag recovery and dips in the bitcoin hashrate in the last two days following Dec. 25. Miners who have taken their operations offline to help stabilize the electricity grid will likely leave them offline for a while longer until authorities are convinced the weather has stabilized. An example of this was back in July when Riot Blockchain had to shut off its mining machines in Texas as the state faced a heat wave.

Related Reading: Bearish Indicator: Bitcoin Volatility Hits All-Time Low

Given this, the bitcoin mining hashrate is expected to trend low for another couple of days before bouncing back up. As for the miners, given that Riot had received $9.5 million in energy credits for turning off operations in July, it is possible that some sort of recompense will be offered to the miners.

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For First Time Ever, Bitcoin Hash Ribbon Golden Cross Has Failed

On-chain data shows the Bitcoin Hash Ribbon golden cross has failed to provide an uplift to the price for the first time ever.

Bitcoin Hash Ribbons Have Recently Formed A Death Cross

As pointed out by an analyst in a CryptoQuant post, the BTC Hash Ribbon model has failed for the first time in the crypto’s history.

The relevant indicator here is the “mining hashrate,” which measures the total amount of computing power connected to the Bitcoin network right now.

When the value of this metric trends up, it means miners are bringing more mining rigs online currently. On the other hand, a decline suggests these chain validators are ditching the network and disconnecting their machines.

The Hash Ribbon is a BTC model that’s based on two moving averages of the hashrate metric. A “moving average” (MA) is the mean value of any quantity that, as its name implies, keeps moving with the metric and changes its value accordingly.

The benefit of an MA is that it smooths out the curve and removes any temporary fluctuations that have no bearing on the long-term trend.

In the context of the Hash Ribbon model, the Bitcoin hashrate MAs of interest are the 30-day and the 60-day versions. Here is a chart that shows the trend in these two ribbons over the last few years:

Bitcoin Hash Ribbon Golden Cross

Looks like the two MAs of the metric have gone through a cross recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin 60-day MA hashrate has crossed above the 30-day version recently.

When this kind of crossover happens, it means the hashrate has been sharply falling recently as the 30-day average has fallen below the longer, 60-day one.

Historically, crosses like these have been bearish death crosses for the price since they are a signal of miner capitulation.

Crosses of the opposite kind, on the contrary, have always had a bullish effect on the price of the coin as they indicate that miners are optimistic on the outcome of BTC since they are expanding their operations.

The latest golden cross, however, took place a few months ago, but instead of a price rise, a decrease has followed it. Since the death cross is now already in, it would appear that for the first time in Bitcoin’s history, this bullish crossover has failed to bear any fruits.

BTC Price

At the time of writing, Bitcoin’s price floats around $17.3k, up 7% in the last week.

Bitcoin Price Chart

BTC seems to have shot up | Source: BTCUSD on TradingView
Featured image from mana5280 on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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Bitcoin Miner Revenues Stay Low As Price Decline Continues

Bitcoin miners have been one of the worse-hit following the decline in the price of the digital asset. After what can be said to be a wonderful run towards the end of 2021, the miners have now hit a rough patch where their revenues have been dropping. The previous week would prove to be no different, signaling a continuation of lower cash flow on the part of miners, as the daily miner revenues remain depressed in the first week of June.

Bitcoin Miners Take A Hit

Bitcoin miners have not had the best couple of months now. With the price of bitcoin dropping, miner revenues have taken a hit. This had seen their daily figures drop to $26 million the previous week and with a 1.47% increase last week, daily miner revenues had jumped to $27.19 million. This is a far cry from what miners were earning when the price of the digital asset had hit its all-time high.

Related Reading | El Salvador Postpones Bitcoin Bonds A Second Time, Here’s Why

Back in November 2021 when bitcoin had been trading as high as $69,000 apiece, daily miner revenues had come out to a cumulative $62 million. This means that daily miner revenues have declined more than 50% in the past six months alone. This drop in profitability has spurred some miners to begin selling their holdings to finance their operations.

The percentage of miner revenues made up by fees remains average at 1.67%. There was no growth at all in this metric from the past week even though most had turned green. Transactions per day were up 0.23% but remain low.

BTC down more than 50% from ATH | Source: BTCUSD on TradingView.com

Daily transaction volumes were up for the past week though. A 9.92% increase in transaction volumes saw it move up from $4.595 billion the previous week to the $5.051 billion figure that was recorded last week, emerging as the metric with the highest growth for the last seven days.

Hashrate Takes A Nosedive

The bitcoin hashrate has been going the way of the daily miner revenues as this, too, had been on a decline recently. The drop in mining revenues has been the biggest factor in this drop in hashrate. While some miners have been able to sell shares or their BTC holdings to finance their mining operations, others have found themselves unable to keep up. As such, they have had to unplug their rigs and take a bow out of the market.

Related Reading | Institutional Investors Refocus On Bitcoin As Market Losses Intensifies

The result of this has been a 10% drop in the bitcoin hashrate over the last month. Block production has taken a hit due to this as the number of blocks per hour is now sitting at 5.85 blocks per hour, representing a 1.11% decrease from the previous week. Average transactions per block are up, however, recording a 0.23% growth in the last 7 days.

BTC hashrate drops 10% | Source: Arcane Research

More miners with high production costs are expected to stop operations if there is no improvement in daily miner revenue. At 6.25 BTC rewards per block mined and lower prices, a lot of miners will likely run into losses.

A decrease in mining difficulty is expected to take place on Wednesday, hopefully triggering a recovery in the hashrate. 

Featured image from Coingape, charts from Arcane Research and TradingView.com

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Bitcoin Mining Difficulty Eyes New ATH As Block Production Ramps Up

Bitcoin mining difficulty has been on the rise as the network has gained more popularity. This is a far cry from what was expected after China, which was known as the mining capital of the world at that point, had laid a blanket ban on crypto mining. Bitcoin miners had been able to successfully set up in other regions of the world and mining activities have ramped up since then.

This time around, it comes along with the growth of blocks mined per hour which has smashed all expectations. Not only has the mining difficulty been affected by this but its effects are being felt all around the mining industry.

Bitcoin Mining Difficulty At New ATH?

Block production rates have risen higher than anticipated to beat the previous target of 6 blocks mined per hour. This number now stands at 6.2 blocks mined in an hour. This increase in block production has led to an increase in mining difficulty which has pushed it towards new all-time highs. Going forward, there is expected to be a 4-5% difficulty adjustment in mining difficulty.

Related Reading | Cardano Turns Bullish In The Short-Term, But Is That All?

If this happens, it will easily send the bitcoin mining difficulty towards a new all-time high. It continues to follow the growing trend that began in August of 2021 after the China ban had gone into effect. It would beat all expectations given that the China ban had seen the bitcoin hash rate crash 50% last year.

BTC hash rate on the rise | Source: Arcane Research
Miners Enjoy More Profitability

The mining difficulty has not been the only thing affected by the increased block production rate. Other things like daily miner revenues have been on the rise. Bitcoin mines saw a 6.86% change in the last week ending on March 28th. This represents more than a $2 million increase over a seven-day period. Also important to note that the same daily revenues had been up 7% in the previous week.

BTC declines to $45,000 | Source: BTCUSD on TradingView.com

Daily transaction volumes also recorded an uptick in the same time period. It grew by a total of 11% touching $6.4 billion in transaction volume per day. It was a result of a recorded growth in the average transaction volume given that transaction volumes per day had only grown 1.5%. The average transaction volume was up 9% in the seven days this data was collated.

Related Reading | SushiSwap Kicks Off Climb, Why This 40% Rally Is Just Getting Heated

Transaction fees saw the highest growth for the week. Given that there is now more demand for block space, transaction fees had been on a steady climb since then. Daily transaction fees grew 20% and are now sitting at $460,000 per day.

Featured image from Investopedia, chart from TradingView.com

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Bitcoin Hashrate Climbs To New High As Price Recovers Above $42,000

Bitcoin’s hash rate has continued its recent climb, riding the waves to new highs. The digital asset that has been suffering following the market crash seems to only be suffering in price as it has kept up the pace in other avenues. Coming out of the weekend, bitcoin has recorded a significant spike in its hash rate, leading to a new high of 248.11TH/s in a period of 24 hours.

Bitcoin Hash Rate Touches New High

Between February 11th and February 12th, the bitcoin hashrate recorded a new high. Miners who have been an integral part of the network since inception have continued to increase their support for it. Not only does mining profit the miners through block rewards and transaction fees, but they also help to secure the network with their activities which is why the recent surge is important.

Relaed Reading | Argentinian Tax Authority to Seize Digital Wallets to Collect Tax Debts

The hash rate has continued to trend around the same level for the better part of the month, fluctuating above and below 200 TH/s. On Saturday however, Blockchain.com reported that the hash rate had jumped 31% in the space of a day. It is one of the most significant growth recorded on the blockchain in recent times.

In a matter of one year alone, the hashrate has grown 54%. This is coming up from the China crackdown on mining that saw the hash rate from the region crash to near zero. The digital asset has since recovered from this and surged towards new highs.

With more power coming from the computing machines of miners, the hash rate has continued to climb. It is, in turn, helping to straighten the bitcoin network, an all-around win for the asset.

Why Is Hash Rate Rising?

The rise in the hash rate can be attributed to the number of miners that are coming into the space. Gone are the days when bitcoin mining was carried out on computers with graphics cards. Nowadays, there are entire farms dedicated to the activity of thousands of mining machines all connected to give the miners a better shot at mining a block. It has grown into a robust, billion-dollar industry.

BTC settles above $42K | Source: BTCUSD on TradingView.com

On the flip side of this, small-time miners are also ramping up their activities. Although their small hash rate makes it harder to make a profit, these small miners are finding refuge in mining pools where they pool their hash rate together, thereby increasing their chances of finding a block.

Relaed Reading | Bitcoin Price Quick Look: Profit Taking Affects Current Market Movements

This has worked out for a couple of miners who have been able to mine full blocks, receiving the full reward, despite their small hash rate. With this, more small miners are coming online but the real values are coming from the big players.

It is expected that bitcoin’s hash rate will continue to rise as more players move into the mining industry. It has become a refuge for investors who want to invest in bitcoin-adjacent products. Currently, Russia has overtaken China and the United States to become the country with the highest hash rate.

Featured image from CoinDesk, chart from TradingView.com

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Bitcoin Hashrate Approaches New ATH, What Does It Mean For The Price?

Data shows Bitcoin mining hashrate is now near its all-time high (ATH) set back in April. Here’s what it may mean for the price of the crypto.

Bitcoin Mining Hashrate Nears A New ATH

According to on-chain data, the BTC network hashrate seems to be approaching the ATH it set back in April of this year.

The “hashrate” is an indicator that shows the total amount of computing power connected to the Bitcoin blockchain network.

On the BTC blockchain, miners compete with each other by solving complex algorithms so that they can handle transactions.

For this purpose, miners require a high amount of computing power. Thus, a high amount of hashrate means there is a lot of power present on the Bitcoin network, which can help the chain perform faster and more efficiently

Also, high values of the indicator may also imply that there are a lot of nodes (that is, miners) connected to the network. Therefore, such values can lead to better decentralization of the BTC network. This helps make the blockchain more secure against any possible attacks.

On the other hand, if a crypto network has low hashrate, the chain may show poor performance, and it might also have worse security.

Related Reading | Why “Bitcoin Creator” Craig Wright Came Out Ahead Despite Having To Pay $100 Million

Now, here is a chart that shows the trend in the value of the Bitcoin hashrate over the past year:

Looks like the value of this indicator has been trending up for a while now | Source: Blockchain.com

As you can see in the above graph, the Bitcoin hashrate seems to be advancing towards its previous ATH that was achieved earlier in the year.

When the ATH was set in April, BTC’s price also peaked then. After China’s crackdowns on mining started, the hashrate began to go down, and had collapsed by June.

Since then, the value of the indicator has steadily worked its way back up, and if the trend continues, a new ATH could be there.

Related Reading | Bitcoin Miners Hold Off On Selling As Their Reserves Reach 2021 High 

Earlier some speculated that when the hashrate will make a new ATH, the price of Bitcoin will also follow lead. However, since the bloodbath of November, the coin’s price has rather dwindled down.

Nonetheless, an increasing hashrate has generally been bullish for Bitcoin, which may also be the case this time.

BTC Price

At the time of writing, Bitcoin’s price floats around $47.7k, down 0.5% in the last seven days. The below chart shows the trend in the price of BTC over the past five days.

BTC’s price seems to have mostly consolidated in the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Blockchain.com

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Despite Red Bitcoin, On-Chain Signals Flip Green

Bitcoin on-chain signals have remained green despite the recent red week. Bitcoin’s price had taken a plunge towards $40K and had brought a lot of losses with it as billions of dollars in long positions were liquidated on December 4th in one of the sharpest declines of the year. Mostly this has brought down a number of metrics associated with the asset but on-chain signals remain resistant.

On-chain data all ranging from miner revenues, transaction fees, hashrate, and daily transaction volumes have all shown positive trends for bitcoin. None of this has been affected by the price decline.

Related Reading | Number Of Bitcoin Lightning Network Nodes Jumps 23% In Three Months

Hashrate Continues Recovery Trend

Bitcoin hashrate had taken a big heat with the China crackdown on mining that took place earlier in the year. The region had gone from providing about 70% of the mining power to almost zero in a matter of weeks, leaving the hashrate to suffer greatly. This has since been rectified as bitcoin miners have found new locations to resume their mining activities.

BTC hashrate recovers post-market crash | Source: Arcane Research

Since then, hashrate has been gradually picking back up and in the past week saw a significant increase. Bitcoin hashrate is up for the past seven days after the first difficulty reduction following ten difficulty adjustments. As the difficulty has dropped, so has the profitability of mining activities increased. Given this, more miners have gotten back in the game and set up their mining rigs once more, leading to a rise in hashrate.

Arcane Research also reported that this increased hashrate has led to an increase in block production rate. As more miners come back on board, an average of 6.46 blocks have been created each hour in the past week. This represents a significant increase of 11% in the same time frame.

BTC loses footing at $50,000 | Source: BTCUSD on TradingView.com
Bitcoin Transaction Fees Rise

Bitcoin transactions fees have remained low through the past weeks, but there was a recorded increase in fees in the past seven days. On average, bitcoin transaction fees grew by 33%. This growth however does not do much for miner revenue. Even though fees are up, they are still relatively meager and only bring in about 1.7% of the total miner revenues.

Related Reading | Majority Of Bitcoin Investors Got In This Year, Says Grayscale

Average transaction value also jumped in the past week. As investors rushed to sell their holdings during the crash, the average transaction volume climbed by 8.3%. This was mostly due to holders who hold larger volumes moving their BTC to exchanges to sell, not only increasing average transaction volume, but also transaction fees at the same time.

Bitcoin daily miner revenues in the first week of December was $52,271,223 compared to daily revenues of $49,975,895 from the previous week. Fees per day, as well as transactions per day, were up at $891,499 and 276,680 respectively.

Featured image from PSU Watch, charts from Arcane Research and TradingView.com

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Is China Considering Lifting The Bitcoin Mining Ban? The NDRC Runs Public Survey

The National Development and Reform Commission is asking the Chinese public for their opinion on the Bitcoin mining ban. Is China’s government playing 4D chess or are they confused and considering backtracking their decision? Can they unring this particular bell or is this a too little too late scenario? Do they really care about what the general public thinks or is this survey just for the optics?

As it usually happens with the Chinese government’s actions, they leave more questions than answers. Nevertheless, let’s unpack the information available and see what Twitter thinks about the situation.

First of all, the official announcement says:

“In accordance with the relevant work arrangements for the rectification of virtual currency “mining” activities, the National Development and Reform Commission and relevant departments have revised the “Industrial Structure Adjustment Guidance Catalog (2019 Edition)”, and now solicit opinions from the public.”

So, they’re considering “rectification of virtual currency “mining” activities,” by which they mean the Bitcoin mining ban. And by “the public,” they mean “Relevant units and people from all walks of life can provide feedback.”

BTC price chart for 10/25/2021 on FTX | Source: BTC/USD on TradingView.com
Is China Actually Considering Lifting The Bitcoin Mining Ban?

Opinions differ. However, according to Three Arrows Capital’s Su Zhu, that’s exactly what’s happening.

China seeking public solicitation of comments regarding un-banning crypto mining 🧐https://t.co/g1wyUdORTt pic.twitter.com/qyRQyTBgcn

— Zhu Su 🔺 (@zhusu) October 25, 2021

People in the replies are not convinced. They theorize that the Chinese government is just trying to create a database of people in favor of Bitcoin mining, or that they are just thinking about lifting the Bitcoin mining ban so they can ban it again on the next cycle. Others doubt the miners will return or that new mining operations will pop up. A few, though, think that the Chinese government realized they made a trillion-dollar mistake.

Chinese journalist Colin Wu, however, sees the news from another angle. “It is not un-banning. On the contrary, its content is to write crypto mining into an industry that must be eliminated.”

Of course, many miners are making comments, but in terms of the current Chinese government’s strong opposition to Bitcoin mining, these comments are likely to be meaningless.

— Wu Blockchain (@WuBlockchain) October 25, 2021

And he links to a .pdf that says the same thing as the original document, but in a different tone altogether:

“In the “Industrial Structure Adjustment Guidance Catalogue (2019 Edition)”, the elimination category “I. Item 7 is added to “Outdated production technology and equipment” and “(18) Others”, and the content is “virtual quasi-currency’mining’ activity.”

The phrases “Outdated production technology” and “Virtual quasi-currency’mining‘” hit different and tell another story about the Bitcoin mining ban. Wu finishes by saying that “in terms of the current Chinese government’s strong opposition to Bitcoin mining, these comments are likely to be meaningless.”

Conclusions And Speculation

Tick-tock next block. China’s Bitcoin mining ban was a blip on the radar. The network kept running as usual and, a few months later, Bitcoin’s hashrate recovered. We at NewsBTC have been trying to figure out the logic behind the Chinese government’s moves regarding Bitcoin. Unsuccessfully. We looked into the new “China Model” and the small hydropower stations question, wondered about the waning of their hashrate dominance, and looked closely into the now-defunct industry.

Even though it seems like a logical theory, we don’t know if the Chinese government is just clearing out the competition for their future CBDC. We are not sure if this whole operation is part of a bigger one that is trying to control all of the Chinese billionaires. Or if they’re just asserting their dominance and showing everyone who’s the boss. We just know that the Bitcoin mining ban might be the biggest mistake of the century. And we’re not even talking about the trillions in fiat currency that the country is losing. 

The Chinese are banning themselves from participation in the winning open network, from interaction with the biggest idea of the century, from owning a piece of the pristine asset that will change the world for the best.

Did they realize all of this and are gearing up for a change of mind?

Featured Image by Andreas Breitling from Pixabay – Charts by TradingView

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Bitcoin Mining In The U.S.: 4 States Attract The Most Miners

Dataset from Foundry shows that four states in the U.S. have the highest Bitcoin hash rate distribution. The dataset shows that many Bitcoin miners are headed to New York, Kentucky, Georgia, and Texas.

Foundry U.S. is the largest mining pool in North America and the fifth-largest globally. The hash rate is a measure of collective mining power. A mining pool enables miners to combine their hashing power with other miners all over the world.

Bitcoin Mining In The U.S.

According to the data, within the U.S., New York accounts for 19.9% of bitcoin’s hash rate, 18.7% in Kentucky, 17.3% is in Georgia, and 14% in Texas.

Source: Foundry U.S.

At the Texas Blockchain Summit in Austin on October 8, 2021, Nic Carter, co-founder of Castle Island Ventures, presented Foundry’s data. “This is the first time we’ve actually had state-level insight on where miners are unless you wanted to go cobble through all the public filings and try to figure it out that way,”

He added that “This is a much more efficient way of figuring out where mining occurs in America.”

However, Carter pointed out that the Foundry dataset does not consider all the U.S. mining hash rates as not all U.S.-based mining farms use its services. One of the largest publicly traded mining companies in America,
Riot Blockchain, with a huge presence in Texas, does not use Foundry. Therefore, the dataset does not account for its hash rate. Texas’ mining presence is understated and could possibly be higher than the 14% quoted.

BTC trading at over $55K | Source: BTCUSD on TradingView.com

Many of the states with the highest Bitcoin hash rates also have high proportions of renewable energy. This fact may have started changing the narrative that bitcoin is bad for the environment.

Related Reading | $425bn Wiped Off Crypto Market As Musk Says Bitcoin Is Bad For The Environment

According to CNBC, a lot of the miners are moving to these states because they have cheap and renewable sources of power. Data from the U.S. Energy Information Administration (EIA) shows that a third of New York’s in-state generation comes from renewables sources. Kentucky, which has the second-highest hash rate, is also known for its hydroelectric and wind power. The state’s government recently passed a law that grants certain tax exemptions to crypto mining operations.

Carter also said that the migration of miners to the U.S. is positive because it means much lower carbon intensity.

Texas Leads Bitcoin Mining

Although Texas ranks fourth according to the data, experts believe it is the top mining destination in the U.S. The state houses mining giants like Riot Blockchain, and the Chinese mining service platform Bitdeer.

A report from earlier this year shows that large orders for mining ASICs are also being delivered to Texas.

Related Reading | Bitcoin Mining Moves to Texas, Bitmain Announces Partner for Massive New Facility

Crypto-friendly lawmakers, a deregulated power grid with real-time spot pricing, and access to significant renewable energy, as well as stranded or flared natural gas, are what make Texas attractive to miners, according to CNBC.

Featured image by Finance Magnates, Chart from TradingView.com

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Since China’s Mining Ban, Bitcoin Hashrate Has Recovered by 68% And Counting

Bitcoin is a perpetual motion machine. The Bitcoin hashrate is slowly climbing to pre-China-ban levels, and the service continued uninterrupted without a hiccup. Such is the power of well-placed incentives. Pantera Capital’s CEO Dan Morehead adds one more factor to the equation. “The bitcoin network has recovered 68% of the drop in hashrate that our difficulty model attributed to China’s ban—likely in places with cleaner energy.”

The recovery is happening exactly as forecast.

The #bitcoin network has recovered 68% of the drop in hashrate that our difficulty model attributed to China's ban—likely in places with cleaner energy.

The transition to renewables is underway.

Sep Letter: https://t.co/xLyaLpPQQN pic.twitter.com/UsK9ML3BU8

— Dan Morehead (@dan_pantera) September 9, 2021

In the company’s newsletter, Pantera fleshes out the argument:

“Although difficult to know with certainty, it seems very likely that much of the reboot in mining power is occurring in places with cleaner energy than those utilized by Chinese miners. 

The transition to renewables is well underway.”

Regarding The Bitcoin Hashrate, Are ESG Concerns Even Important?

Here at NewsBTC we’ve determined that China’s Bitcoin mining tended to go to provinces with abundant green energy. Bitcoin incentivizes that. The Bitcoin hashrate tends to go where the energy is cheap. We’ve also determined that the environment doesn’t seem to be the reason for the Bitcoin mining ban.

“The fact that the electricity for crypto mining in Sichuan came from clean hydropower meant that many thought the province would be a safe haven for Bitcoin miners. As pressure on local governments to cut carbon emissions mounts, projects were successfully shuttered in some other provincial-level regions — such as Xinjiang and Inner Mongolia — where the mining was chiefly fueled by coal.” 

The only thing we can know for sure about the Chinese government’s plan is this: the environment is not on their radar. They’re closing these mining operations for other reasons altogether. 

It’s also important to remember that China’s Bitcoin hashrate dominance was already on decline before the mining ban. 

“According to Arcane Research, CBECI numbers say that:

China’s share of total Bitcoin mining power has declined from 75.5% in September 2019 to 46% in April 2021 — before the restrictions on Chinese miners were even imposed. That figure is much lower than the older estimate of 65%.

That’s a sharp decline. Why did China’s miners lose so much ground before the ban?”

None of this invalidates Pantera Capital’s original thesis, though. “The transition to renewables is well underway,” that certainly seems to be the case. And the Bitcoin hashrate keeps climbing. 

BTC price chart for 09/09/2021 on Timex | Source: BTC/USD on TradingView.com
Do Bitcoin Halvins Imply Cuts In Energy Consumption?

Another interesting idea present in the mentioned newsletter is this one:

“Bitcoin has a built-in mechanism to reduce energy consumption over time.  The number of bitcoin issued in the every-ten-minutes block reward is cut in half every four years.  Ceteris paribus, the amount of electricity Bitcoin consumes will be cut by 50% every four years.  For comparison, the Paris Accord only requires 7% cuts every four years.”

Of course, Bitcoin’s price fluctuates when related to fiat currencies. So, the value of every Bitcoin stays the same, but the price might – and usually does – increase more than twofold. Even though the miner’s rewards are cut in half, their earnings might increase. That extra money could bring even more competition and a Bitcoin hashrate increase with it. 

Taking that into account, Pantera poses:

“Perhaps a more realistic scenario is if the price of bitcoin were to double every four years in parallel with the halvings – putting bitcoin at $320,000 /BTC in 2032 – electricity consumption would be no greater than it is today.”

Enough About The Bitcoin Hashrate, What About The Price?

Another point that the newsletter makes is this one.“This is China’s third ban of Bitcoin.  The reverse hex is still working – the price is up 57%.”

Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course

Is this a bullish signal? Bitcoin’s price has “only” increased by 57% since the Chinese mining ban sent the Bitcoin hashrate in death spiral for a few seconds. Bitcoin paid the price and resisted sabotage like a hero. We’re not sure if a “reverse hex” could be considered reliable information, but… maybe this IS a bullish signal?

Featured Image by Diana Polekhina on Unsplash – Charts by TradingView and Pantera Capital