Demand for mining bitcoin has never been higher, with both the hashrate and network difficulty spiking to a new all time high.
The hashrate has risen from around 230 to near 260 exahashes a second, one of the biggest jump in years.
The difficulty, which is a network calculation to determine how many mathematical equations must be completed to receive the block reward within ten minutes, has also risen to nearly 34 trillion.
It’s not too clear what exactly caused the spike, or if there was a specific event to point to, but new mining facilities keep coming to market, with Bitech Mining being the latest to file for an Initial Public Offering.
They’re fairly small, indicating the variety in the mining industry, but Core Scientific, a much bigger miner, also recently revealed further expansion in stating:
“The Company expanded its fleet of self-mining servers during the September month to approximately 130,000, increasing hashrate to approximately 13 EH/s. The Company expects to deploy approximately 38,000 additional self-mining ASIC servers before the end of 2022.”
A more intriguing hypothesis for this spike may well be the ethereum Merge upgrade to Proof of Stake, which removed miners.
They were GPU miners, so couldn’t easily move to bitcoin ASICS mining, but they may have nonetheless moved to bitcoin mining gear to continue mining operations in bitcoin.
It may also be that with price reaching some stability since June, just as some speculate by directly buying bitcoin, there may be new investors speculating through buying mining gear.
The full story is probably a bit of all of the above: expansion and new entrants, by both big and small miners; new mining demand from GPU migration, and room for more speculation following price stability.
That’s after bitcoin’s hashrate dropped to 189 EH/s in July from the usual 220, with it recovering since and now spiking.
Making it unclear whether that recovery might be a leading indicator or otherwise, but if at least some of this new hash aims to mine with the view of holding, rather than purely as a business, that arguably wouldn’t be too much different than buying bitcoin directly.
Except it might not reflect on price as quickly because obviously a mining operation takes more time than an exchange.
The hashrate can therefore be a leading indicator, but in light of incomplete information as we do not know who these miners are, we might just have to wait and see what effect, if any, this spike might have on price.