Bitcoin hashrate spiked 40% this year! Is the mining surge sustainable? Dive into the details of network difficulty and miner scaling. #Bitcoin #Hashrate #Mining
Explanation in video
Hey everyone, John here! Welcome back to the blog. Today, we’re going to talk about something that sounds a bit like a secret handshake in the world of Bitcoin – the “hashrate.” But don’t worry, by the end of this, you’ll understand what it is and why it’s been making headlines recently. And as always, my trusty assistant Lila is here to ask the questions you might be thinking!
So, What’s This “Hashrate” Thing Anyway?
Alright, let’s dive right in. Imagine Bitcoin as a giant, super-secure digital ledger that records every transaction. To keep this ledger safe and accurate, a lot of computer power is needed. The “hashrate” is basically a measure of the total combined computing power that miners are using to secure the Bitcoin network and process transactions.
Lila: “John, ‘hashrate’ still sounds a bit like a sneeze! Can you make it even simpler? And what are these ‘miners’ you mentioned?”
John: “Haha, good one, Lila! Think of it like this: if Bitcoin was a giant, really tough math problem that needed to be solved to add a new page (or ‘block’) of transactions to the ledger, the hashrate would be the total number of guesses or attempts all the ‘miners’ are making every single second to solve that problem. The more guesses per second, the higher the hashrate!”
“And ‘miners’ are people or companies all over the world who connect powerful, specialized computers to the Bitcoin network. These computers do the ‘guessing’ I just mentioned. When a miner’s computer is the first to solve the current math problem, they get to add the latest block of transactions to the Bitcoin blockchain, and as a reward, they receive some newly created Bitcoin and transaction fees. It’s their incentive for doing all this computational work that keeps the network running smoothly and securely.”
Measuring the Mighty Hashrate
Now, this computing power is immense! The article we’re looking at mentions figures like “901 EH/s.” That looks like alphabet soup, right?
Lila: “Exactly! What on earth is EH/s? Is that like… ‘Extra Hamburgers per second’?”
John: “Not quite, though that sounds delicious! ‘EH/s’ stands for Exahashes per second. An ‘exahash’ is a massive number – it’s a quintillion, which is a 1 followed by 18 zeros! So, when we say 901 EH/s, it means the Bitcoin network is performing 901 quintillion calculations or ‘guesses’ every single second. It’s just a unit to measure an almost unimaginable amount of computing power. The main takeaway is: the bigger the number, the more powerful the network.”
The Network’s “Difficulty” Level
The article also talks about “network difficulty.” This is another key part of how Bitcoin works.
Lila: “Okay, so hashrate is the total guessing power. What’s ‘network difficulty’ then? Is it like making the math problem harder?”
John: “You’ve got it, Lila! The Bitcoin network is designed so that a new block of transactions is added roughly every 10 minutes. If more and more miners join the network (increasing the hashrate), they’d start solving the problem much faster than 10 minutes, right?”
“To prevent this, Bitcoin has an automatic system that adjusts the ‘difficulty’ of that math problem approximately every two weeks. If the hashrate has gone up and blocks are being found too quickly, the network makes the problem harder (increases difficulty). If hashrate has gone down and blocks are taking too long, it makes the problem easier (decreases difficulty). The goal is to keep that 10-minute average block time steady, no matter how much computing power is on the network.”
The article mentions Bitcoin’s network difficulty is at a record high, around “127 T”. The ‘T’ here likely refers to Terahashes, another unit, but the key point is: it’s harder than ever to mine a Bitcoin block!
What’s the Big News? Hashrate Soars!
So, here’s the really interesting part from the article: even though the network difficulty is at an all-time high (meaning it’s super tough to mine), the hashrate is still increasing significantly!
- The average hashrate recently was around 901 EH/s.
- Some days, it even touched nearly 920 EH/s!
- And the headline news: Bitcoin’s hashrate is up a whopping 40% this year alone!
This means that despite the mining challenge being at its peak, miners are bringing even more computing power online.
Lila: “Wow, a 40% increase is huge! But if it’s so difficult to mine, why are miners still ‘scaling up’ and adding more power? Are they expecting to earn more Bitcoin that way?”
John: “That’s the million-dollar question, Lila! ‘Scaling up’ just means these mining operations are expanding, buying more and newer specialized computers – often called ASICs.”
Lila: “ASICs? Another one! What are those?”
John: “Good catch! ASICs stands for Application-Specific Integrated Circuits. Think of them like this: your home computer is a general-purpose tool, like a Swiss Army knife, good for many things. An ASIC, however, is like a super-powered, custom-built wrench designed only for one specific task – in this case, performing the calculations for Bitcoin mining. They are incredibly efficient and powerful at that one job, much more so than regular computers.”
Why Are Miners Ramping Up Despite Record Difficulty?
So, why are these miners investing in more ASICs and growing their operations? There are a few likely reasons:
- Long-term Belief: Many miners have a strong belief in the future value of Bitcoin. They might be willing to mine at lower immediate profits (or even a loss sometimes) if they think the Bitcoin they earn will be worth much more later.
- Competition is Fierce: Bitcoin mining is very competitive. If other miners are increasing their hashrate, an individual miner needs to keep pace or even grow faster to maintain or increase their share of the mining rewards. It’s an arms race for computing power!
- Technological Advancements: New ASICs are constantly being developed that are more powerful and more energy-efficient. Miners might be upgrading their older, less efficient machines to newer models. This can help them stay competitive even if the price of Bitcoin or the difficulty changes.
- Preparing for (or Recovering from) the ‘Halving’: Bitcoin has a built-in event called the ‘halving’ that happens roughly every four years. It cuts the number of new Bitcoins awarded to miners for adding a block by half. The most recent halving was in April 2024. Miners might have been scaling up before it to maximize rewards, or are now scaling with more efficient machines to stay profitable after their rewards were reduced.
Lila: “The ‘halving’? That sounds dramatic! So their reward gets cut in half?”
John: “Exactly. It’s a pre-programmed part of Bitcoin designed to control the supply of new coins, making Bitcoin a deflationary asset over time. It makes mining more challenging from a revenue perspective, so miners need to be very efficient and often plan their scaling strategies around these events.”
The article also mentions a “persistent mismatch between the protocol’s two-week [difficulty adjustment] and the actual hashrate growth.” This just means the hashrate is increasing so quickly that the difficulty, which only adjusts every two weeks or so, is constantly playing catch-up. It shows very aggressive growth in mining power.
Is More Hashrate a Good Thing for Bitcoin?
Generally, yes, a higher hashrate is seen as a positive sign for Bitcoin.
Lila: “So, all these super-computers working away… that makes Bitcoin stronger?”
John: “Precisely! Here’s why:
- Increased Security: The higher the hashrate, the more computing power is needed to try and attack the network (for example, to try and reverse transactions). With hashrate at such high levels, attacking Bitcoin would be incredibly expensive and practically impossible for any single entity. Think of it like having more and stronger guards protecting a treasure vault.
- Network Robustness: A growing hashrate indicates that miners are confident in Bitcoin’s future and are willing to invest significant resources into its ecosystem. This signals a healthy and robust network.
- Decentralization (Potentially): While high hashrate itself doesn’t guarantee decentralization, growth can come from many different miners across the globe, contributing to a more distributed and resilient network.
So, seeing the hashrate climb, especially by 40% in a year despite record difficulty, is a strong indicator of the Bitcoin network’s health and the commitment of its miners.
My Thoughts on This
John: It’s truly fascinating to see this relentless drive from miners. This 40% jump in hashrate this year, even with the difficulty being so high, shows incredible commitment and a strong belief in Bitcoin’s long-term prospects. It’s a testament to the competitive spirit and innovation within the mining sector.
Lila: “I agree! It sounded so complicated at first, but ‘hashrate’ being the ‘muscle’ or ‘brainpower’ of Bitcoin makes sense. And seeing it grow so much means Bitcoin is getting stronger, which is pretty cool. It’s like an invisible global race, and it’s all making Bitcoin more secure for everyone who uses it!”
This continuous scaling by miners is a core feature of what makes Bitcoin so resilient. It’s a dynamic and ever-evolving part of the crypto world that’s exciting to watch.
This article is based on the following original source, summarized from the author’s perspective:
Bitcoin hashrate up 40% this year as miners keep
scaling