Besides increased interest in bitcoin, there is another thing linked to the bitcoin network that has seen significant growth over the past seven months, hash rate. Data shows that the hash rate for the bitcoin network peaked at around 68,631,992 TH/s on June 29 and has been continuously rising since mid-December of last year. This is the all-time high (ATH) value of the hash rate for the bitcoin network.
Bitcoin has been a lot in the news lately owing to its recent price uptick. The digital asset almost touched the $14,000 mark in the past few days before coming back down and this rise in its price has attracted investor-attention from all over the globe.
In simplest terms, hash rate essentially means the computing power lent to the bitcoin network by miners, participating in its ecosystem. The computing power then refers to the speed at which operations take place in the network by solving bitcoin code. With increasing computing power and miner interest, the difficulty associated with solving bitcoin code is also adjusted accordingly and regularly.
In comparison, the hash rate of Ethereum on the same day was around 174 TH/s, a number far too insignificant than the bitcoin one. This shows that bitcoin still holds its supremacy when it comes to network trust and miner interest. Hash rate of a network can be used to gauge the overall health of a blockchain network.
As said by Ted Shabecoff in a Hackernoon post:
Bitcoin is widely considered a safe harbor of cryptoassets, the oldest cryptoasset in existence, and it’s price and hashrate are harbingers of how the greater cryptocurrency market will perform.
Higher hash rates thus solidify the reputation of the bitcoin network in terms of both trust and capability by highlighting the willingness of miners to participate in it. Bitcoin achieving an ATH now after seeing so many hurdles highlights that the digital asset is still alive and kicking. It is still the leader in the crypto market when it comes to global popularity.
When it comes to the linkage of bitcoin price and hash rate of the network, it is usually the former that drives the latter. Bitcoin price is a thing of prime importance when it comes to general public and investor community who have no usual interest in the hash rate of network lying underneath bitcoin.
As soon as the price spikes, investors step in with hopes of riding on a prolonged bull-run. General public also makes strides to make a quick buck. Increased price also increases the interest of miners to step into the network with hopes of getting an increasing reward. The opposite happens when the coin flips to the other side.
Price decline directs the miners to shut down their gigs if the balance of costs and rewards gets disturbed. Costs for mining usually refer to the expenses associated with the mining rig and electricity. Rewards are given to miners in bitcoin and if price of bitcoin falls in the market, it eventually leads to an incline towards leaving the network for the miners. As stated by Christopher Bendiksen, Head of Research at CoinShares:
Miners receive their income in bitcoin and thus depend on exchanges — and exchange prices — to cover their expenses and (hopefully) turn a profit.
All in all, much cannot be said about the current increased hash rate’s effect on bitcoin’s price directly. It does, however, establishes a more secure and credible image of the bitcoin blockchain network in the crypto ecosystem. It highlights that when it comes to bitcoin growth on the technological front, the digital asset is going in the right direction.