On-chain data shows that, for the first time in history, Bitcoin miners need more than 1 EH/s of computing power daily to mine a single token of the asset.
Bitcoin Hashcoin has now reached a new all-time high
As Julio Moreno, head of research at CryptoQuant, explains in a job on X, BTC Hashcoin set a new record. “Hashcoin” here refers to an indicator that tracks the daily hash rate that miners need to produce 1 BTC.
THE Hash rate measures the computing power that miners have attached to the Bitcoin network. This metric is measured in terms of hashes per second or, in the much larger and more practical unit these days, exahashes per second (EH/s).
The total hash rate on the blockchain has recently been near its all-time high (ATH), as its 7-day average value stands at 638 EH/s. The chart below shows the evolution of this indicator over the past year.
The value of the metric seems to have been heading up during this period | Source: Blockchain.com
A key feature of the Bitcoin blockchain is that the block time on the network (i.e. the speed at which miners solve blocks) remains relatively constant, at the standard level of 10 minutes per block.
This feature exists because miners receive block rewards for solving blocks, which are the only way to create new cryptocurrency tokens. By ensuring that these blocks are distributed at a consistent rate, the growth of the asset remains stable and its inflation is predictable.
Therefore, no matter how much Hashrate miners add to the network, they will not get faster on mining blocks in the long run.
The additional computing power will initially allow them to earn rewards more quickly, but only until the next biweekly. Difficulty fit, where the chain would make the miners’ work just hard enough to counteract the benefits of the extra power.
Since rewards remain capped in this way, an increase in Hashrate means that the distribution of rewards between different power units becomes smaller.
So, every time the total Hashrate of the network increases, an individual miner must increase their power by the same percentage to remain competitive with the chain.
In other words, the previously mentioned “Hashcoin” increases when the Hashrate increases. As Hashrate has been near the ATH recently, Hashcoin has also been relatively high.
Looks like the value of the metric has spiked in recent days | Source: CryptoQuant
The chart shows that Bitcoin Hashcoin has recently seen strong growth and reached a new ATH. But the Hashrate has moved sideways, so where does this spike come from?
The answer lies in the fourth halving, which occurred on April 19. While difficulty ensures that the inflation rate of the asset remains constant, halving is a measure to actively reduce this rate.
Block rewards are cut exactly in half during these events, which occur approximately every four years, and this was naturally the case for the last one as well.
With block rewards now halved, miners can only produce half of what they were before, which is why Hashcoin has soared. Miners now need 1.13 EH/s to mine a single token each day.
BTC Price
At the time of writing, Bitcoin is trading at around $62,900, down 5% over the past week.
The price of the asset appears to have been moving down recently | Source: BTCUSD on TradingView
Featured image by Dmytro Demidko on Unsplash.com, Blockchain.com, CryptoQuant.com, chart from TradingView.com
