After the block reward halving, many analysts in the Bitcoin space expected a “death spiral.”
The term is one created by a professor who, in 2018 speculated that BTC could fall to $0 due to a collapse in miners. A “death spiral,” per the journalist, takes place when Bitcoin miners leave the network, resulting in slow/no transactions, making BTC intrinsically worthless.
Bitcoin Hash Rate Establishes New All-Time High
According to crypto data firm TradeBlock, Bitcoin’s network hash rate just hit a new all-time high. The company shared the image below on July 7th, showing that the seven-day moving average of the hash rate is now above 124 exahashes per second. This is over double that seen a year ago.
Chart of Bitcoin's hash rate over time from TradeBlock (@Tradeblock on Twitter)
The hash rate is the measure of the computational power being used to secure transactions on a blockchain network. As Bitcoin.org describes the term:
Investors in the space have responded to this metric with immense optimism. One trader bashed the death spiral narrative, asking where the death spiral is.
Their optimism isn’t unfounded: analysis suggests that increased Bitcoin mining activity should correspond with higher prices for BTC.
This theory was cemented with a price model from digital asset manager and investor Charles Edwards. In 2019, he came out with a model showing that Bitcoin’s price has always centered around its energy consumption in joules.
Edwards recently found that with the ongoing hash rate surge, Bitcoin is now trading around 27% under its energy value. Should the hash rate stay this high, BTC is likely to be attracted towards its energy value.
Bitcoin Energy Value analysis by Charles Edwards (@caprioleio on Tiwtter), a digital asset analyst. Chart from TradingView.com
Catalysts Behind the Hash Rate Surge
Behind Bitcoin’s ongoing hash rate surge is seemingly two catalysts:
Considering that mining firms continue to roll out fresh hardware and the rainy season is still ongoing, Bitcoin’s hash rate could trend even higher.
Photo by Nick Chong on Unsplash Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com What Death Spiral? Bitcoin Hash Rate Surges to Fresh All-Time High
Leading global blockchain news provider. A blockchain, originally block chain, is a growing list of records, called blocks, that are linked using cryptography.