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Bitcoin’s (BTC) hashrate, a measure of the computational power securing the network, reached a new pinnacle. Data from Glassnode showed the seven-day moving average surging to 833 exahashes per second (EH/s), marking a 9% increase from 767 EH/s observed just a few days earlier.
This milestone comes amid a backdrop of declining pre-orders for mining hardware, as reported by Miner Mag. The initial rush for equipment was linked to the upcoming April 2024 halving event, which is expected to slash the block reward by 50%. Despite this, analysts anticipate a deceleration in hashrate growth as firms have already stocked up on the necessary hardware to stay competitive.
The hashrate’s ascent is indicative of the network’s robust security, with a higher hashrate meaning greater protection against attacks. The past 18 months have seen a significant uptick in Bitcoin’s hashrate, largely fueled by institutional investments in mining infrastructure. Even with the halving on the horizon, the hashrate has swelled by over 40%, suggesting that mining operations continue to expand.
However, the rise in computational power has not translated into increased mining profitability. One of the main factors is the historically low transaction fees, which have seen a decline in miner revenue. Currently, a high-priority transaction in the Bitcoin mempool costs only 5 sat/vB, equivalent to $0.69, which is among the lowest fee levels in recent memory.
The economic model of the Bitcoin network is designed to eventually have transaction fees replace block subsidies as the main income for miners. Yet, the present market conditions are challenging this transition, as miners find it more difficult to cover operational costs with the reduced earnings from transaction fees.
Miners are also bracing for the next difficulty adjustment, expected in four days, which is projected to increase by over 6%. This adjustment would set a new record for difficulty, potentially exerting additional pressure on mining profitability.
The ongoing developments in the Bitcoin network’s hashrate and the dynamics of mining profitability continue to shape the landscape for miners as they adapt to changes within the cryptocurrency ecosystem.
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