The crypto community is growing more and more confident that Bitcoin (BTC) and the crypto markets have finally reached their bottom. Prices are beginning to rise and so is the Bitcoin hash rate, which has recently hit a 4-month high, according to data released by Blockchain.com.
The Bitcoin hash rate surpassed 52 quintillion hashes per second on March 19 and is currently leveled out at roughly 50 quintillion hashes per second.
The fact that the hash rate is rising is very good news for Bitcoin, as it not only secures the Bitcoin network but indicates a change in sentiment from bearish to bullish.
Does a Higher Hash Rate Equate to Higher Prices?
The increase in mining power suggests that Bitcoin miners are profiting at the current spot prices and indicates that miners expect the price of Bitcoin to rise. When the hash rate rises, it indicates that more miners are joining the network, which they wouldn’t be doing if they expected to be mining at a loss.
Therefore, a rise in hash rate is a bullish indicator for Bitcoin. It further raises optimism in the crypto community, which leads investors to buy more Bitcoin… which leads to an increase in price, which then leads to an increase in hash rate because miners are profiting more.
It’s essentially a positive feedback loop that benefits the entire Bitcoin ecosystem by increasing the price and making the network more secure.
Commenting on the relationship between the Bitcoin hash rate and the crypto’s price is Jameson Lopp, a prominent crypto influencer who took to Twitter in June of last year to point out the relationship between price speculation and hash rate.
Hashrate follows price. Some folks believe price follows hashrate, possibly because hashrate doesn't simply track ~spot~ price, but rather tracks some ~speculative~ future price. Miners are speculators too!
— Jameson Lopp (@lopp) June 23, 2018
Final Thoughts
Towards the end of 2018, Bitcoin’s hash rate plummeted as the price of Bitcoin fell off a cliff from $6,300 to $3,600 in less than a month. Bitcoin miners capitulated and disabled their mining rigs, as they couldn’t afford to mine at a loss.
However, now that the markets have seemingly reached a bottom Bitcoin miners are turning bullish once again, resulting in an increased hash rate.
As previously reported by IIB, Chinese Bitcoin miners are preparing for the next bull run by purchasing new and used mining rigs, making deals with electricity companies, and setting up their mining farms.
In addition to the fact that we may have already bottomed, Bitcoin miners are setting themselves up to mine as many Bitcoins as they can before the next Bitcoin halving in May 2020. For their mining reward gets sliced in half from 12.5 BTC to 6.25 BTC and the price of Bitcoin is expected to reach $55,000 soon after the halving.
Do you agree with the Bitcoin miners that we have reached a market bottom? Let us know what you think in the comment section below.
