On Christmas day, the Bitcoin network achieved a remarkable milestone, with its hash rate reaching an all-time high of 544 exahashes per second (EH/s), according to data from Blockchain.com.
This record-breaking performance was corroborated by Bitinfocharts, which reported an average hash rate peak over the holiday weekend. Bitcoin’s hash rate, a measure of the network’s computing power and security, has more than doubled in 2023, marking a substantial 130% increase since the beginning of the year.
Synchronization between hash rate and price
Interestingly, the surge in Bitcoin’s hash rate in 2023 has been closely mirrored by the cryptocurrency’s price trajectory. Bitcoin’s price has surged by over 150% since January 1, 2023, demonstrating a remarkable synchronicity between the network’s security and its market value.
Reflexivity Research co-founder Will Clemente, when examining the hash rate on a logarithmic scale, emphasized the resilience of the Bitcoin network in the face of adversity, including the China mining ban of the summer of 2021.
Clemente commented,
“The summer 2021 China mining ban is barely a blip. Imagine fading the most secure decentralized open-source monetary network on the planet, couldn’t be me.”
Challenges for miners
While the surge in Bitcoin’s hash rate is a testament to the network’s strength and security, it presents new challenges for cryptocurrency miners. Miners play a crucial role in securing the network by verifying transactions and adding them to the blockchain.
With the hash rate reaching new heights, miners must work harder and invest in more powerful hardware to compete for the next block reward. This increased competition can erode profit margins for miners, particularly during periods of low profitability.
Declining hash price and profitability
Hash price, a key metric that reflects the profitability of Bitcoin mining, has witnessed a decline over the past week. The decline is partially attributed to the cooling of the BRC-20 ordinal inscription craze.
As of now, the hash price stands at $0.09 per terahashes per second per day, as reported by HashrateIndex. This represents a 34% decrease from its 2023 high of $0.136/TH/s/day, reached on December 17th.
Hash price often experiences spikes during periods of heightened demand, leading to increased transaction fees, such as those observed during recent inscription frenzies.
Sustained fee pressure
One noteworthy observation comes from Glassnode analyst “Checkmatey,” who pointed out that Bitcoin’s mempools have not fully cleared for nearly a year.
Since February, this prolonged state of unprocessed transactions has led to sustained elevated fee pressure, impacting users and businesses that rely on efficient and cost-effective Bitcoin transactions. The ongoing fee pressure underscores the network’s need for scalability solutions to ensure a smoother and more affordable user experience.
