Bitcoin Miners Expand Operations as Hashrate Hits All-Time High

Bitcoin Miners Expand Capacity Amid Rising Hashrate

Bitcoin (BTC) miners are once again ramping up their operations as the network’s hashrate has reached a remarkable all-time high this week, following a recent miner capitulation event. According to a report from on-chain analysis firm CryptoQuant shared with CoinDesk, the network hashrate achieved a new record of 627 exahash per second on Tuesday, rebounding from an 8.5% decline observed in early July.

This expansion is notable, especially in light of the recent downturn in bitcoin prices and the historically low hash price, which refers to the average revenue generated per unit of mining power. Despite these challenges, the sentiment among miners appears to be resilient after several months of price fluctuations.

Hashrate is a critical metric that quantifies the computational power dedicated by miners to mint new bitcoins and validate transactions on the Bitcoin network. Each second, millions of calculations are carried out in a competitive process known as mining to secure new blocks on the blockchain.

CryptoQuant emphasized the recent miner capitulation event, noting, “We may have seen a miner capitulation event last week as miner outflows surged after prices reached $49,000.” The report highlighted a significant spike in daily miner outflows, which peaked at 19,000 BTC on August 5, marking the highest level since March 18.

Miners play a crucial role in the blockchain ecosystem, providing the necessary computing power in exchange for rewards in the form of BTC tokens. However, to sustain their operations, miners often liquidate portions of their bitcoin holdings, as maintaining such systems can be quite expensive. In fact, only five popular mining rigs were reported to be profitable in early July when bitcoin prices hovered around the $54,000 level.

CryptoQuant further noted, “Miners sold some Bitcoin as their average operating profit margins were squeezed to 25%, the lowest since January 22.” Typically, a miner capitulation event is indicative of local price bottoms for Bitcoin during bullish market phases.

This year, spikes in miner outflows have coincided with local price bottoms, notably in March 2023 following the sell-off of Silicon Valley Bank and in January 2024 after the price correction triggered by the launch of the Bitcoin spot ETF in the U.S.

As of Wednesday afternoon in Asia, BTC is trading just above $61,000, reflecting a 2.8% increase in the last 24 hours, leading the gains among major cryptocurrencies.