On-chain data shows that Bitcoin mining hashrate has been rising recently, indicating that miners are back to expanding their facilities.
Bitcoin mining hash rate rises from recent lows
Mining hash rate refers to a metric that tracks the computing power that Bitcoin miners are currently connected to the network with. It is measured in terahashes per second (TH/s).
When the metric value increases, existing miners add to their facilities, and new miners join the network. This trend indicates that miners find the network attractive.
On the other hand, the decline in the index indicates that some miners have decided to part ways with the blockchain, most likely because they no longer find mining profitable.
Now, here is a chart showing the trend in the 7-day moving average (MA) of Bitcoin mining hash rate over the past year:
The value of the metric appears to have been going up in recent days | Source: Blockchain.com
As shown in the chart above, Bitcoin’s 7-day mining hashrate dropped to around 610 million TH/s earlier in the month from an all-time high of 667 million TH/s in late July. The reason behind this trend is probably the bearish momentum Bitcoin has been experiencing during that period.
Miners earn most of their income through block rewards, which are given at a fixed price per Bitcoin and for a fixed period of time. Therefore, the only variable associated with these rewards is the price of the cryptocurrency in US dollars. The previous decline in the value of the asset has had a significant impact on miner funding.
Bitcoin fell below $50,000 during that crash, but the asset has since made some notable recoveries, though it is still far from the $70,000 level it was at towards the end of last month.
Interestingly, despite the insufficient recovery, the mining hash rate on the 7-day moving average has shown a sharp recovery over the past week, reaching 650 TH/s two days ago. It seems that some miners may be betting on a better outcome for the asset soon.
A popular indicator used to track the position of BTC miners based on hash rate is the “hash bars”. The bars here refer to the 30-day and 60-day moving averages of the hash rate.
When the former intersects with the latter, miners are considered to be in a phase of capitulation, where they quickly take their computing power out of service. Historically, BTC has tended to see some bottoming when miners were in distress.
On-chain analytics firm CryptoQuant discusses the latest trend in this metric in a new report. mail On X.
The data for the Hash Ribbons over the last few years | Source: CryptoQuant on X
The chart shows that Bitcoin Hash bars were giving a capitulation signal earlier, but since then the 30-day moving average has crossed above the 60-day level.
““While the indicator is not intended to pinpoint a price bottom, it often precedes higher prices by signaling a decrease in selling pressure from miners,” CryptoQuant explains.
Bitcoin price
At the time of writing, Bitcoin is trading at around $58,800, down 4% from last week.
Looks like the price of the asset has been moving sideways over the last few days | Source: BTCUSD on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
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