Bitcoin has recently seen a hashrate spike and the question is if that, combined with the upcoming halvening, will lead to a massive increase in the price of Bitcoin. At time of writing, the price stood at just over $9100.
Over the last three months, the hashrate for Bitcoin has effectively increased over 25%, from 90 exahash to over 130. This represents a severe increase in interest from the mining community, and means the amount of money invested into the everyday operation of the Bitcoin network has severely jumped.
The more people mining, the less each one has a chance of getting a block reward. This makes their rewards more valuable. So the inferred belief is that Bitcoin will see a price jump as a result of all this increased hashing.
But, how does that play out in history?
Bitcoin hash rate hits an all-time high ?
— Mia Tam (@blockandchain) March 2, 2020
All time high #Bitcoin hash rate – 1st March 2020
Bring on the halvening ? pic.twitter.com/S5eXqayzlt
— Danny Scott ⚡ (@CoinCornerDanny) March 2, 2020
During the 2017 bull run, the hashrate was far lower than it is today. Interest was steadily increasing in mining, as you can see from the below chart, but all the same, the amount of actual mining was much less than today.
Hashrate is the combined effort by all the mining pools to find new blocks for the Bitcoin blockchain.
Miners are the first to sell their coins to market. In theory, if it costs them more to get the coins, they should demand a higher price. But the market must also be willing to pay that higher price, which is not always the case.
Bitcoin has about $11,000 to go to get back to peak performance. From there, the sky is the limit. The hashrate is currently about 13 times what it was when Bitcoin touched $20,000 the first time.
The question of whether there is a correlation between the price of Bitcoin and the hashrate is not easily answered. While we’ve seen a serious increase in hash recently, we haven’t seen a subsequent increase in the price. That makes you wonder if there’s any connection at all.
An increase to the hashrate shows growing interest from the mining community in the world’s oldest cryptocurrency.
So, where is the price increase? Nowhere to be found. Therefore, at this point at least, it’s safe to say there’s no preview of a massive price increase just because mining power has grown significantly.
There are other avenues from which to expect price action, such as the halvening in supply that is upcoming. People think that may lead to a doubling in the price, but historically the halvening hasn’t done anything like that. There will probably be a price jump, nevertheless.
It wouldn’t be out of the ordinary to expect a run from around $10,000 to $15,000, for example. For now, the market seems afraid of numbers too high. It canceled out the $10,000 BTC, although it will surely be back.
If the Bitcoin hashrate is to have an effect on the price, it doesn’t seem immediate. If at all.