Data shows the Bitcoin mining hashrate has recently registered its third-largest 3-month upwards increase in the past five years.
Bitcoin Mining Hashrate Has Sharply Gone Up Recently
As an analyst on Twitter pointed out, only the aftermaths of the 2021 China ban and the 2019 bear market saw more rapid increases. The “mining hashrate” is an indicator that measures the total amount of computing power that miners have connected to the Bitcoin blockchain.
When this metric’s value goes up, miners are bringing more machines online on the BTC network right now. Such a trend suggests the blockchain is currently attractive to mine for these chain validators.
On the other hand, the indicator’s value going down implies some miners are disconnecting their rigs from the network. This could be a sign that the average miner isn’t finding BTC mining that profitable currently.
Now, here is a chart that shows the trend in the Bitcoin mining hashrate, as well as in its 3-month percent change, over the last few years:
The value of the metric seems to have been quite high in recent days | Source: James V. Straten on Twitter
The above graph shows that the Bitcoin mining hashrate (the orange curve) has observed some sharp uptrend in the last few weeks. Because of this exceptional, consistent growth, the 3-month percent change in the indicator has also shot up.
According to this spike, the metric’s value has grown by about 52% in the last three months. This increase in the hashrate is the third-highest BTC blockchain has seen in the last five years.
The largest one within this period came during the aftermath of the 2018-2019 bear market when the April 2019 rally occurred. Many miners may find it unprofitable to mine the coin during bear markets. Hence the hashrate can significantly decrease as miners disconnect from the network.
When the rally in April 2019 took place right after the worst part of the bear market, miners suddenly found it very profitable to mine the asset again, so they reconnected their machines quickly, hence why the hashrate showed such a sharp jump.
The second largest 3-month upwards adjustment came when the bull run of the 2nd half of 2021 kicked off. Earlier that year, China had enforced a ban on Bitcoin mining in the country, which led to a mass migration of miners out of the country.
This migration can also be seen in the chart, as a large negative 3-month change in the hashrate occurred in May-July 2021. When miners finished their migration and set up their facilities again, the hashrate bounced back.
Now, the recent trend in the indicator is interesting. During the 2022 bear market, the hashrate only saw upwards growth, even though the price saw a deep drawdown.
The likely reason behind this is that miners enjoyed some immense profits in the 2021 bull run, so they laid out their expansion plans keeping them in mind, and the facilities just took some time to set up, hence why the positive growth in the bear market.
Naturally, the latest sharp growth in the indicator is likely to have come in part from such growth and partly because the latest rally has made mining profitable again.
At the time of writing, Bitcoin is trading around $26,900, down 4% in the last week.
BTC has plunged | Source: BTCUSD on TradingView
Featured image from Dmitry Demidko on Unsplash.com, charts from TradingView.com, Glassnode.com