Bitcoin hashrate continues to rise, up 167% in the past year

Source: LongHash

Although Bitcoin is still down about 41.5% from its 2019 high, the computing power ensuring the network security continues to climb, indicating that people are investing in the asset for the long term.

According to Crypto This, the mining difficulty of the Bitcoin network is expected to rise by another 8% on Tuesday afternoon, which will bring the mining difficulty of the Bitcoin network to about 15 trillion. According to BitInfoCharts, this shows that the computing power of the Bitcoin network has risen by about 167% since January 2019.

Why is the hashrate rising while the price is falling?

Of course, the price of Bitcoin has also risen over the past year, from the $3,500 range a year ago to $8,100 on Monday. Obviously, higher Bitcoin prices will naturally lead to an increase in network computing power, because for miners, more mining machines online can make greater profits.

However, it is also worth noting that Bitcoin’s mining difficulty dropped at an unprecedented rate in late 2018, falling by about a third from 7.4 trillion to 5.1 trillion in just two months. At the time, there were even hysterical concerns about a so-called “mining death spiral,” which was easily refuted.

In other words, Bitcoin hashrate hit a low point near the end of 2018, so there is plenty of room for upside, especially once the price starts to rebound.

Even though Bitcoin’s price reached its highest point of the year in June 2019, its hash rate has continued to climb. When considering why this is happening, it is important to remember that crypto mining operates from a long-term investment perspective, with high upfront costs for mining machines, long-term site leases, and electricity bills, among other factors. In other words, hash rate follows long-term trends, not short-term fluctuations in Bitcoin’s price.

How will the halving affect this trend?

Of course, some will wonder whether the upcoming halving — after which the number of new Bitcoins created every ten minutes will be cut in half — will have a negative impact on the network’s hashrate. All else remaining constant, it is likely that the reduction in Bitcoin mining incentives should reduce hashrate in the long run.

However, this does not mean that the hashrate of the Bitcoin network will definitely plummet immediately after the halving occurs. In fact, after the only two halvings in November 2012 and July 2016, the hashrate of Bitcoin has risen sharply. Although these two increases in hashrate may be due to the massive Bitcoin bull run that followed the halving.

Additionally, the Bitcoin Cash network will also undergo its own halving approximately one month before the Bitcoin halving, which is problematic from a security perspective.

Hashrate always follows long-term price trends, so how the halving will ultimately affect hashrate will depend on how the halving affects the price of Bitcoin. That being said, in the event of a short-term surge in the price of the currency, old mining machines can be quickly put online again.

At this point, there is a great deal of disagreement as to whether the upcoming halving has been priced into the Bitcoin market. However, the fact that Bitcoin’s hashrate has continued to rise even as the price of the coin has fallen suggests that people have been investing in the asset for the long term over the past year.

LongHash, understand blockchain with data.