New ATH Recorded After Bitcoin Hashrate Rebounds

On-chain data revealed a robust recovery in the Bitcoin mining hashrate, surpassing its recent lows and establishing a new all-time high (ATH). As such, the 7-day average mining hashrate of Bitcoin has surged to an unprecedented level. This metric tracks the total computing power linked to the Bitcoin blockchain by miners.

An upward trend signifies an influx of new miners and expansion of existing facilities, indicating heightened interest in blockchain mining. Conversely, a declining trend suggests some miners may have opted to disconnect when it comes to the chain altogether, possibly due to unprofitability in mining.

Understanding The Context

The surge in mining hashrate could be attributed to the recent trend in mining difficulty. Mining difficulty on the Bitcoin blockchain determines the level of complexity miners face in mining blocks on the network. This metric exists to regulate cryptocurrency inflation, as block rewards are the sole means of producing more of the asset.

By controlling the pace of the miners, the production rate can be managed, increasing or decreasing difficulty accordingly. The Bitcoin network aims for a block to be mined approximately every ten minutes. When miners boost their hashrate, they become more efficient at mining and can produce blocks at a pace faster than the standard rate. Subsequently, the blockchain adjusts the difficulty in the next scheduled adjustment (which occurs approximately every two weeks), ensuring miners are slowed down to the intended pace.

Declining Difficulty

There has been a decline in difficulty in the latest adjustment, a natural outcome of the hashrate downturn. Interestingly, the bottoming out of the 7-day average hashrate coincided with this difficulty decrease. It seems miners have capitalized on the opportunity presented by the decreased difficulty, connecting a significant amount of computing power to the network for faster block mining.

At any rate, although the blockchain may increase difficulty, potentially leading to the withdrawal of the additional hashrate (if it was only added to exploit the dip), miners can currently enjoy accelerated rewards until any such adjustment occurs.