Bitcoin network “horsepower” continues to climb, which is good news for its security but bad news for miners who are now facing more competition than ever.
Bitcoin’s hashrate hit a new peak on October 12 of 447 exahashes per second, according to Blockchain.com.
Bitinfocharts has a slightly higher average figure of 481 EH/s, but both are in agreement that it is the highest the metric has ever been.
Hashrate has climbed 77% since the beginning of this year and is up 170% since the bull market peak in November 2021. This means that it is now harder than ever to mine the next block on the chain.
Moreover, the next difficulty adjustment in a few days could be as high as +7.4%. Difficulty is a measure of the competition between miners, and it is also at an all-time high of 57.3T.
The net effect is a decrease in mining profitability, also known as hashprice. Hashprice, which refers to the expected value of 1 TH/s of hashing power per day, has fallen to $0.06 per TH/s per day.
This is down 85% since the bull market peak of $0.40 per TH/s per day as mining profitability slumps.
Bitcoin miners are currently being hit with a triple whammy of high hash rates and difficulty, low asset prices, and high energy costs.
Moreover, JPMorgan predicted that hash rates would drop by 20% after the next halving in late April or early May.
Earlier this week, trader Oliver Velez pointed out that the United States has the largest share of global hashrate at 40%. Furthermore, asset management giant BlackRock has invested in several of the largest Bitcoin mining firms – Riot Platforms, Marathon Digital, Cipher Mining, Hut 8, and Terawulf. It also lent money to bankrupt Bitcoin miner Core Scientific in December.
“It is clear that the U.S. is playing to win the hashrate war,” he said.
If Bitcoin prices do not improve soon, there may be another miner capitulation. The upcoming halving in around six months’ time will double the headache for miners as the block reward is halved.
It was predicted that BTC prices would need to reach around $90K for mining to remain profitable at current levels.
However, markets are going in the opposite direction at the moment. BTC remains unchanged on the day at $26,844; however, it has lost 4% since last weekend.
There is solid support at the $26K level, which could be where it is heading in the short term.