Bitcoin hashrate, which measures the cumulative computational power within the network, has reached a new ATH

By Selena On May 3, 2020

The next Bitcoin halving is expected to happen in a little bit more than a week. Meanwhile, the Bitcoin hashrate hit a new record moving above 140 EH/s.

Bitcoin hashrate hits new ATH eight days before BTC Halving

After every halving, Bitcoin ended somewhat higher. Maybe not immediately, but after a few months – it did. At the same time, miners have recently watched how the Bitcoin hashrate managed to hit a new ATH, according to Glassnode.

It has surged above the 140 EH/s level, with a little more than ten days left until the much-hyped May halving.

#Bitcoin hash rate hit a new all-time high. pic.twitter.com/XtPbZRU8wp

— glassnode (@glassnode) May 3, 2020

After the first halving, the Bitcoin price went up from $12 in November 2012 to a peak of $ 1,100 in November 2013. Also, the second halving saw a considerable rise 11 months later, growing from around $650 in July 2016 to more than $ 2,500 in May 2017. The clearest explanation of this is that the halving offers pressure on supply, driving demand.

Still, the last halving was in 2016, before the ICO rampage, before the cryptocurrency derivatives evolved, and a long time before the COVID-19 started ruining the global economy. So, the question that is relevant now is: can we compare the previous situations and its outcomes with this now?

The hashrate is an indicator that is useful to track in the period around a halving. A higher BTC hashrate shows more computing power in the network, or, in other words, high participation from miners.

Hash rates around previous halvings were usually showing the same trends to price. For example, in the 2016 halving, the hash rate showed a sharper rise a year later, showing that the incline of Bitcoin’s price attracted more miners.

Mining rewards are just one part of comprehensive mining profitability. Transaction fees are another way that miners gather their income and looking at transaction fees around the last halving, and there was also no important change following the event. Same as price and hash rate, transaction fees grew 11 months after the last mining event in 2016.

Lennix Lai, the director of financial markets at OKEx, said miners might be put off by the prospect of decreasing rewards and only earning income from transaction fees.

He said:

“With the expected cut in block rewards, I think the industry would start by questioning the basic assumption of halving — whether or not the transaction fees alone would be sufficient to sustain the entire Bitcoin network.”

Bitcoin as the Inflation Cure

Central banks are now using quantitative easing to pump fiat money into their economies, which will ultimately cause inflation.

Joel Edgerton, the COO at bitFlyer, stated that many bought Bitcoin during the recent crash, and so the drivers for the current halving may be different.

Samson Mow, the chief strategy officer of Blockstream, agrees that this Bitcoin halving is unique because of the extraordinary amount of money being printed that is pretty much bullish for Bitcoin.

He said:

“I think we’ve yet to see the full extent of economic uncertainty and COVID-19 impacting Bitcoin. The average person is only just starting to realize that Bitcoin is the only real safe haven for their money.”

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