Bitcoin Hashrate Closes In On ATH As BTC Reclaims $100,000

On-chain data shows the Bitcoin Hashrate has been on the rise recently, an indication that the miners are expanding their mining farms.

Bitcoin Mining Hashrate Has Returned Close To Its All-Time High

The “Hashrate” refers to an indicator that keeps track of the total amount of computing power that the miners as a whole have connected to the Bitcoin blockchain. This metric is useful for determining the sentiment among the chain validators.

When the value of the indicator goes up, it means new miners are joining the network and/or old ones are expanding their farms. Such a trend implies BTC is looking a profitable venture to this cohort.

On the other hand, the metric registering a decline suggests some of the miners have decided to disconnect from the chain, potentially because they are no longer able to break even.

Now, here is a chart that shows the trend in the 7-day average of the Bitcoin Hashrate over the past year:

The 7-day average value of the metric seems to have been climbing up in recent days | Source: Blockchain.com

As displayed in the above graph, the Bitcoin Hashrate observed a sharp rise last month and set a new all-time high (ATH). This climb in the indicator occurred as BTC’s price also surged. The reason behind this trend was the fact that miners are dependent on the price for their revenue.

These chain validators make their income from two sources: the block subsidy and the transaction fees. The former is what they receive as compensation for solving blocks on the chain, while the latter is a small payment attached by users on individual transfers.

Historically, the transfer fees has tended to make up for only a small part of the miner revenue. A chart that showcases how dominant block subsidy has been for miner income has been shared by the on-chain analytics firm Glassnode in its latest weekly report.

The cumulative total revenue of the miners vs the total fee revenue | Source: Glassnode’s The Week Onchain – Week 50, 2024

In the graph, the total cumulative revenue of the Bitcoin miners (that is, the block subsidy and the transaction fees combined) is shown in yellow, while the transaction fees is highlighted in red.

So far in the history of the cryptocurrency, the chain validators have made a total revenue of $71.5 billion. Out of these, only $4.2 billion has come from the transaction fees.

Now, a feature of the Bitcoin blockchain is that the block subsidy remains fixed in BTC value (except for during special events called Halvings, where they are permanently slashed down in half every year) and is also given out at a nearly constant rate of time.

This leaves the USD value of the asset as the only variable associated to them. Thus, whenever the price rises, so does the revenue of the miners, which ends up reflecting in the Hashrate.

Interestingly, while BTC continued to grow past last month’s high, the 7-day Hashrate went down instead. It seems the miners have finally corrected course as the indicator has reversed its direction during the past week and is now moving to challenge the ATH.