Bitcoin Hash Rate Nears All-Time High as Mining Resettles

The global hash rate is approaching an all-time high, as Bitcoin mining resettles in new countries following the vacuum left by China.

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Bitcoin’s hash rate rose to 172 million terahashes per second, according to data from Blockchain.com. The indicator, which measures the difficulty of creating new coins, has not achieved such heights since May.

As part of its reversal on cryptocurrencies this year, Chinese authorities banned cryptocurrency mining in May, also citing the environmental impact of the energy-intensive practice. The crackdown soon spread to regions of the country whose energy policies had facilitated China’s rise to become the previously leading contributor to the global hash rate. 

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That distinction has now returned to the United States, where a great deal of the mining activity has relocated since then, according to data from the Cambridge Centre for Alternative Finance. The ban has also been a boon for new facilities in other countries offering cheap sources of energy, like Iceland, Norway and Canada. 

In fact, the switch to more efficient equipment is largely responsible for the boosted hash rates. According to mining company Bitfury, “most of the recovery is attributable to new-generation equipment coming online, not relocation of equipment from China, where much of the equipment was too inefficient to keep operating in new locations.”

Bounceback

Although China’s ban on cryptocurrencies contributed to their price dip over the summer, prices steadily recovered in the fall. In light of that increasing demand, active miners were able to take advantage of the shortage in production capacity. These include miners in the US, such as Marathon Digital and Riot Blockchain, who have now raised their forecasts for next year when they expect to open new facilities in Texas and Colorado, respectively. 

Although hash rates have now recovered, China’s ban has still had an impact on the total rate of production overall, which is “far below what it would have been but for the China development,” according to Bitfury. Calling the previous year-end forecast of 198 million terahashes per second “a stretch,” chief strategy officer at digital asset specialist Bitooda Sam Doctor believes hash rates between 180 million to 190 million terahashes per second to be more reasonable.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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