On December 25th, Bitcoin‘s hash rate hit a record high of 544 exahash per second (EH/s), marking a significant 130% increase from January’s 253 EH/s. This surge coincides with Bitcoin’s price jumping over 150% in 2023. While this appears positive, it introduces additional challenges for miners.
The rising hash rate, critical for network security and efficiency, has also increased pressure on miners already grappling with profitability declines. The hash price, a key profitability metric, has dropped from its December 17th high of $0.136 to $0.09 per daily terahash, according to HashrateIndex data.
Profitability is mainly affected by persistent high fee pressure in Bitcoin’s memory pools and the accumulation of unconfirmed transactions. This congestion, lasting nearly a year, not only increases costs for miners but could also lead to higher transaction fees for users.
During high-demand periods, transaction fees can spike suddenly, while ongoing memory pool congestion remains a significant concern for both miners and users. As Bitcoin continues to climb, addressing these scalability challenges is vital for maintaining the network’s health.
Glassnode analyst Checkmatey highlights that Bitcoin has been battling constant memory congestion for nearly a year, with sustained high fee pressure since February. Despite this, miner fee revenue is reaching all-time highs, reflecting peaks in hash rate and difficulty. Checkmatey emphasizes that Bitcoin’s fundamentals remain strong amidst these challenges, ensuring the network is as secure and robust as ever.
The upcoming halving event could exacerbate difficulties for miners, potentially halving rewards from 6.25 to 3.125. However, experts predict that the halving could later alleviate the rapidly increasing mining difficulties. Additionally, the increasing hash rate indicates enhanced network security and could potentially drive BTC’s price into a bull market.