Why is it important for bitcoin hashrate to reach ATH?
The Bitcoin network made headlines this week after the hash rate hit a new all-time high (ATH) of 248.11 million terahashes per second. On February 14, however, the index fell slightly. Despite this, there is strong support for continuing the trend towards increasing network security.
Bitcoin Network Hashrate | Source: YCharts
Observe Data In terms of mining pool contributions, Foundry has been dominating the hashrate for a while. It even became the best bitcoin mining pool last December. At the time of writing, this pool accounts for 17.58% of the network’s total hash power. It is worth noting that this pool was put into operation only in June last year
Daily bitcoin real-time hashrate | Source: btc.com
Foundry’s creation dates back to China’s Bitcoin mining ban last May.
This regulatory measure has far-reaching implications due to the highly concentrated mining industry in the country. One of the biggest consequences was that miners had to emigrate to the United States. Companies like Foundry have embraced this trend, setting up operations in the countryside, primarily in states like Georgia and Texas.
Other companies also followed Foundry’s model to offset the damage caused by China’s ban. This will generate enough profit to become an asset in Valkyrie’s new BTC mining ETF (swap fund). No wonder that many companies in this industry cannot leave the industry. For example, Bitfinex and Tether recently announced their own mining investments tweet by CTO Paolo Ardoino.
The mining frenzy was also fueled when politicians openly urged the industry to set up plants in their states. The regulations have also been adjusted to create incentives. Follow tweet by US Senator Robert Jones Portman, the Treasury Department recently stated that miners are not subject to tax reporting. At the same time, states like Kentucky and Wyoming offer mining companies tax incentives to attract lucrative industries to their regions.
In fact, in 2021 alone, a total of 33 states have passed legislation to support their crypto infrastructure, while 17 states have enacted new legislation. As a result, US mining infrastructure is now well developed. Moreover, Russia is also taking note of this and will soon introduce positive regulations.
However, the explosive hashrate has not impacted miners well, as their monthly earnings have dropped significantly since hitting a new high in October 2021. This happened around the same time BTC price hit a new ATH.
Bitcoin Miner Earnings | Source: Coin Metrics
Adjusted on-chain volume and the drop in the number of new addresses joining the network may also have contributed to this trend, which started after last year’s halving. If miners’ rewards are reduced due to the halving, transaction fees are expected to ensure security on the network.
However, that number has also declined significantly over the past year, by exactly 93.57%, thanks to scaling solutions like the Lightning Network. At the same time, his contribution to the mining income also decreases, which further reduces the miner’s income. In particular, it is difficult to test whether the increased hashrate will benefit investors. What is certain, however, is that the ATH hash rate will influence the Bitcoin price in the future.
Average Bitcoin Transaction Fee | The source: Ycharts
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