Bitcoin Hash Rate Reaches New High Despite Price Challenges

This month, Bitcoin’s price may not seem thrilling, but the network’s total hash rate continues to reach new all-time highs on a regular basis.

The gap between security and price indicates that Bitcoin mining companies are keen on investing in new hardware, even in the face of unpredictable market conditions.

Bitcoin’s Steady Hash Rate

As reported by the on-chain analytics firm Glassnode, miner revenue has seen a significant drop since Bitcoin hit its all-time high in March.

This decline is largely attributed to the falling price of BTC and the Bitcoin halving in March, which reduced rewards from Bitcoin’s block subsidy, along with a significant drop in Bitcoin transaction fee revenue.

Regardless, the hash rate reached a new peak of 693 exahashes per second (EH/s) on Sunday, maintaining fierce competition in a low-revenue landscape. “Currently, the average number of hashes required to mine a block stands at 338,000 exahash,” noted Glassnode.

Moreover, while this situation would typically encourage Bitcoin mining firms to sell their BTC to manage expenses, on-chain data indicates they have shifted to a buy-and-hold strategy.

“Miners often exhibit pro-cyclical behavior, selling during downturns and HODLing during uptrends,” the analysts added. “The rise in hash rate and mining difficulty signifies a progressively higher production cost for BTC, which may negatively impact miner profitability soon.”

Marathon Digital, the largest publicly traded mining company, has publicly stated its commitment to HODLing as much BTC as possible. It is also utilizing convertible debt to acquire more BTC, similar to the approach of Bitcoin development firm MicroStrategy, reflecting growing confidence in immediate BTC investments rather than in mining operations.

Will Bitcoin’s Price Bounce Back for Miners?

On the one hand, certain on-chain metrics for Bitcoin regarding its price do not look promising: Bitcoin’s net settlement volume has tapered off to its annual average, and its monthly trading volume on centralized exchanges has dropped significantly below the yearly average. This translates to reduced trading activity, less speculation, and diminished demand for BTC.

Conversely, several well-known investors, including Bitwise CIO Matt Hougan and BitMEX co-founder Arthur Hayes, believe Bitcoin is poised for a rebound as September concludes.

According to Hougan, September is typically a slow month for both Bitcoin and stocks in general, while October and November are historically strong months for the asset. “I maintain my expectation that we will see a significant rally as this uncertainty starts to subside in October and November,” Hougan remarked on Monday.