Mining: Bitcoin’s hashrate growth does not stop

The growth of the bitcoin mining hashrate continues. 

In fact, new all-time records were set on Sunday 5 November 2023. 

Bitcoin mining: Sunday’s record hashrate

The most striking record is the average hourly hashrate. 

According to CoinWarz estimates, Sunday was the first day in history to exceed 600 Eh/s. 

It should be noted that on Thursday it fell very briefly below 390 Eh/s, and yesterday it was as low as 380 Eh/s. This shows how inaccurate these estimates really are.

Analysing the daily averages instead, Sunday’s record was 526 Eh/s, compared with 429 Eh/s on 2 November and 431 yesterday.

So Sunday’s was indeed a single peak, but a new all-time high. The previous one, in terms of average daily estimates, was on 28 October, when 510 Eh/s was exceeded for the first time in history. 

It should be noted that the previous high was on 15 September, and the one before that was on 8 July. So almost every month now, Bitcoin’s hashrate is hitting new all-time highs.

The Hashrate Growth Trend in Bitcoin Mining

As these are still estimates, it is worth looking at the weekly averages to get a more realistic idea of the trend. 

Looking at the seven-day moving average, the highest peak is 477 Eh/s, which was reached yesterday. The previous high was 470 Eh/s on 2 November.

The upward trend started in January this year and has not yet ended. 

After also falling below 230 Eh/s on 28 December, the weekly average began to rise, reaching new all-time highs in mid-January when it exceeded 270 Eh/s for the first time in history. 

Since then, the rise has been almost continuous, with only a pause between mid-June and mid-September, during which a few individual daily highs were recorded. 

Obviously, this trend follows that of bitcoin’s market value, as miners only ever mint BTC, and when these fall in value, they are forced to shut down the less efficient machines. 

Indeed, there have been three major drops in the hashrate in the last three years.

The first between May and July 2021 due to the Chinese ban, the second in May 2022 with the collapse of the crypto markets following the implosion of the Earth/Moon ecosystem, and the third in November 2022 following the collapse due to the failure of FTX.

The next halving

With the fourth halving of bitcoin coming next April, which will effectively halve the miners’ revenue, they are probably squeezing their machines as hard as they can before they have to shut them down for good. 

That is, when the reward for undermining a blockchain is inevitably halved, the miners will be forced to shut down forever the least efficient machines, i.e. the ones that consume the most for the same number of hashes produced, and therefore cost the most. 

Since they already know very well which machines they will most likely be forced to shut down for good, it is possible that they have decided to squeeze the most out of them until then. 

Indeed, despite the recent surge in bitcoin’s market value, the profitability of mining remains low. 

In October it was around $0.06 per Th/s per day, while it has now risen to around $0.08. By mid-January it had more or less stabilised at around $0.07 per day per Th/s, which is in line with the trend for 2023. 

The low point was reached at the end of 2022, when it dropped to almost $0.05, but before the implosion of the Earth/Moon ecosystem it was as high as $0.20 per Th/s per day. 

In other words, the current profitability of mining is not far from the all-time lows reached at the end of 2022, after another collapse of the crypto markets following the failure of FTX. 

It cannot be ruled out that the miners who are currently pushing their machines to the limit are doing so in order to accumulate as many BTCs as possible in the hope that they will increase in value next year.

The environmental impact

It is true that bitcoin mining consumes a lot of electricity, and more hashrate generally means more consumption. 

However, the historical record for consumption goes back to the first half of 2022, according to the Bitcoin Energy Consumption Index. 

At that time, the estimate of total annual consumption reached over 200 TWh, while it is now below 130. At the beginning of January, it had fallen to 70. 

The reason why the current energy consumption estimate is lower than in early 2022, despite the sharp increase in the hash rate, is simply due to the increase in the efficiency of mining machines. 

In the last two years, the increase in efficiency has been massive, and this has led to a reduction in consumption for the same number of hashes mined. In fact, the reduction in consumption due to the increase in efficiency has been greater than the increase in consumption due to the increase in hash rate. 

Furthermore, it should not be forgotten that the country with the highest hashrate in the world is now the US, and in the US most of the electricity consumed by bitcoin mining comes from non-polluting sources.