- Bitcoin’s hash rate had surged by 10.8% on the daily analysis.
- The sudden increase in the hash rate ensures security for the bitcoin network.
- Three major factors contribute to the increase in the hash rate.
The leading cryptocurrency, Bitcoin (BTC) reportedly exhibited a heavy elevation in its hash rate with a 10.8% increase, indicating a new all-time high on the daily basis, and ensuring security for the bitcoin network.
Interestingly, there is a multitude of factors that contribute to the increase in bitcoin’s hash rate. Primarily, the hash rate is dependent on the computing power required by the miners to mine a block. Thus, a higher hash rate indicates the demand for a stronger mining rig, allowing the miners to mine and earn rewards.
It could be interpreted that the reduction in the prices of the graphics processing unit (GPU), had significantly helped the miners offset their operational cost amidst the bear market.
Also, when the mining rig providers such as Bitman cut down the price of Antminers, an initiative to bring back the crypto miners to profit, the bitcoin miners were able to control their initial costs.
Soon after China banned cryptocurrencies to avoid the growing risks of China’s financial system, bitcoin miners relocated themselves to other countries including Kazakhstan, Canada, and Germany, thereby decentralizing themselves, being less reliant on China.
However, according to the Cambridge Centre for Alternative Finance, China resumed its mining activities three months after the imposition of the crypto ban. It is evident that the return of China to the crypto space had obviously contributed to the rise in its hash rate.
After the Ethereum Merge, by which the blockchain transitioned from PoW to PoS consensus mechanism, Ethereum does not depend on the GPUs for mining operations. Consequently, the ETH miners were forced to move to bitcoin due to the inconveniences of the sudden shift in the ETH mining mechanism.
Thus, the GPU price cut, China’s resumption of crypto trade, and the Ethereum merge could be seen as the major factors that led to the increase in the bitcoin hash rate.
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