The Bitcoin hash rate continues to rise, having seen a spike last weekend (May 27-28, 2023) that puts it on track to retest its all-time high of 400 TH/s.
Hash rate quantifies the computing power within a proof-of-work (PoW) network. Additionally, it serves as an indicator to assess the overall health and safety of a network.
A higher hash rate shows increasing attempts to solve the target hash and win the block. This indicates that more miners are participating in the network or more powerful mining equipment is coming online.
Bitcoin hash rate
The chart above shows a sustained upward trajectory for the Bitcoin hash rate. Although a temporary dip occurred around May 2021 due to China’s mining ban, a recovery from late June 2021 saw a noticeable acceleration in the overall upward trend.
In March, members of the Bitcoin community commented on the unprecedented hash rate increase – offering their theories to explain the issue.
Seb Gouspillou, CEO of mining company BigBlock DC Bitcoin, said this was due to a flood of miners upgrading outdated equipment. However, River Financial Analyst Sam Wouters attributed the hash rate jump to positive BTC price action, which saw the cryptocurrency’s main spike from $22,000 to $28,300.
In March, the hash rate reached a new all-time high of 398 TH/s. However, after a brief dip, it surpassed this level on May 11, reaching 400 TH/s. Three weeks later, the hash rate is taking shape to re-test that level with a current reading of 396 TH/s.
Difficulty adjustment
There is an ongoing debate as to whether the price of Bitcoin follows the hash rate or if the opposite is true.
The co-founder of Reflexivity Research, Will Clement, alluded to the former by pointing out that during the 2019 bear market, the hash rate did not reach an all-time high until Bitcoin had tripled in price from its lows. This time, the hash rate doubled from the May 2021 lows, but the price of BTC was only up 75% from its low.
Likewise, Orange Pill podcast host, Max Keizersaid, “Hashrate is more important to track than price,” adding that price has a “mathematically guaranteed” higher probability of rising with increasing hash rate.
Analyze the difficulty trend, CryptoSlate Searcher James Van Straten noted that the rise in the hash rate would justify a higher adjustment. However, since 2020, the summer period is generally characterized by lesser difficulty adjustments – which did not happen this year.
Mining difficulty refers to an algorithmic function that regulates the timing of block resolution. For example, an increasing hash rate will reduce the target hash resolution time, but the blocking time should remain at around 10 minutes, which requires difficulty to adjust higher.