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Bitcoin’s hash rate reaches all-time high – is a breakout imminent?

Elliot Hill

Bitcoin’s hash rate reached an all-time high last week of over 119 exahashes per second (EH/s).

A high hash rate generally reflects the amount of miners trying to validate blocks on the Bitcoin blockchain.

The more miners who enter the network, the higher the hash rate becomes, and the difficulty of the new mining algorithm adjustment is increased.

The difficulty adjusts automatically to ensure that block times remain consistent at around 10 minutes per block.

Hash Rate chart from Blockchain.com

In September 2019, Coin Rivet reported that the Bitcoin hash rate had crossed the 100 EH/s mark, which at the time was a highly significant benchmark and milestone for the network.

The hash rate has only been below 100 EH/s for just one day so far this year, indicating that a consistent hash rate above 100 EH/s seems likely going forward into the new year.

A higher hash rate results in a more secure Bitcoin network, as more participants means a greater degree of decentralisation.

The hash rate is therefore a direct indication of how decentralised the Bitcoin network is.

However, many experts also believe Bitcoin’s hash rate may correlate with the asset’s price. So is there any merit to this theory?

What could hash rate mean for BTC price?

Bitcoin has seen some positive price action in the last week, rising 8% since Friday, although what portion of this is attributable to an increase in hash rate is unknown.

In the past, hash rate has correlated somewhat with price action. In late 2018, hash rates declined slightly alongside Bitcoin’s slump to around $4,000. The hash rate has gradually risen since along with the price of Bitcoin.

Despite this uncertainty, 2020 is indeed a key year on the Bitcoin calendar, as the block reward halving approaches in the coming months.

The halving will see block rewards halved to 6.25 BTC, which may put increased pressure on prices and catapult BTC back to its historic highs – or beyond.

It’s also worth bearing in mind that current hash rates are many times greater than in 2017, when BTC last reached highs of over $20,000.

The hash rate has declined today to 111 EH/s, but it still remains well above the new benchmark of 100 EH/s.

 

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