The mining power of the Bitcoin network has recovered strongly since it plummeted in June following the exodus of miners from China due to restrictions imposed by that government. Thanks to this increase, the mining power tripled, to return to the levels it was at at the end of May.
The hashrate is the combined total computational power used to mine and process transactions on the blockchain; that is, it is the ability to mine a cryptocurrency by adding the power of all miners. It is very important that the hashrate is as high as possible, because the more mining power the network has, the greater the security it offers, and the more difficult it is to attack by hackers.
Bitcoin’s median hashrate hit an all-time high on May 13 and in the six weeks after it dropped more than 65 percent, due to the effects produced by “the great blackout” of the miners of China. Currently, Bitcoin is regaining its strength, and in turn, the network is regaining its safety to the levels of early June and, if the trend continues, it could reach a new all-time high in the coming months.
As the hashrate has recovered to pre-exodus levels, investors believe that the migration of miners is almost complete. The network increases the difficulty of mining to more miners there are, which provides security to the network.
The recent growth of the hashrate has led to the latest rise, of about 7 percent, which occurred on August 13. If there were one more, which is expected to happen soon, it would mean increased computation costs for miners as more operations, previously based in China, come back online to compete for blocks.
As network security grew along with the mining power of Bitcoin, the price followed the trend, rising from approximately $ 30,000 to the current $ 49,000 per unit, rising about 70 percent as the hashrate tripled, up 200 percent.
China’s crackdown on Bitcoin mining earlier in the year is the reason behind the collapse in the network’s hashrate. That government forced its miners to shut down their operations, and since a large part of the global hashrate resided in the country, the effects on the network were profound. This was one of the many factors that hurt the price of the cryptocurrency, and it caused the 55 percent drop from its all-time highs near $ 65,000. Since the difficulty of mining is directly related to the amount of computing power on the network, its value fell after Chinese miners had to move their farms elsewhere.
This meant that while these Chinese miners were migrating to other countries, the miners who were already present in countries like the United States, were able to obtain higher profits thanks to less difficulty, and less competition.
Thanks to this growth in the hashrate, Bitcoin has once again resumed its upward trend, and its credibility, added to the adoption by many countries, mainly Latin America, and companies.
Franco Capelo, CEO of the Institute for Technical Analysis, told Infobae: “Now Bitcoin is preparing to become the main competitor of the dollar, and what many hope, the new safeguard of the world’s money. Being a new technology, it still needs time, recognition, and acceptance or adoption, but when it gets it, it could possibly dethrone gold and the dollar. “