SCX | Crypto Insights #3
The Bitcoin hash rate
What the Bitcoin hash rate is telling us about the Bitcoin network and its price.
The Bitcoin hash rate is continuing to set new record highs. But what exactly is the hash rate and what does it mean when it is rising? The hash rate refers to the overall computing power involved in validating transactions on the Bitcoin blockchain. More power suggests greater network security and rising interest in the profitability potential of Bitcoin mining. In other words, when the hash rate is rising the miners are speculating for a higher Bitcoin price. No wonder the mining giant Bitmain has recently launched, what it calls the “world’s largest” mining farm in Rockdale, Texas.
This indicates that the price of Bitcoin has a big effect on the miners, because if the price is too low mining may not be profitable for most miners. This also means that with a rising price of Bitcoin more miners join the network, which in turn increases the network security and may be a indication for higher a Bitcoin price in the future.
After the halving in May 2020, miners will compete for half as many new Bitcoins per new block as of now — 6.25 BTC instead of 12.5 BTC. With the equivalent of up to $63 million unavailable each week, commentators widely expect the anticipation of the block halving event to dramatically boost the Bitcoin price prior to May.
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