Bitcoin Miners Expand Capacity As Network Hashrate Hits New Record Despite Recent Price Drop

Bitcoin BTC/USD miners are ramping up their operations once again, as the network’s hashrate reached an unprecedented high this week, following a period of reduced activity.

What Happened: According to a report by on-chain analysis firm CryptoQuant, the network’s hashrate set a new record of 627 exahash per second on Tuesday, recovering from an 8.5% decline experienced in early July, Coindesk reported.

This surge in capacity comes despite a recent dip in Bitcoin prices and a record-low hash price—indicating that miners are feeling optimistic after a phase of selling in recent months.

Hashrate, the measure of computational power used by miners to mint new Bitcoin and verify transactions, is critical to the security and operation of the Bitcoin network.

Miners solve complex calculations each second in a competitive process known as mining to secure new blocks.

“We may have seen a miner capitulation event last week as miner outflows spiked after prices touched $49,000,” CryptoQuant noted.

On Aug. 5, daily miner outflows surged to 19,000 BTC—the highest level since March 18.

Also Read: Here’s How Much Goldman Sachs Invested In Bitcoin ETFs (Despite Saying They’re ‘Not Believers In Crypto’)

This suggests that miners, who typically sell Bitcoin to sustain their operations, may have been offloading their holdings due to squeezed profit margins.

CryptoQuant highlighted that miners’ average operating profit margins fell to 25%, the lowest since Jan. 22.

Historically, miner capitulation events are observed near local bottoms for Bitcoin prices during bull markets.

For instance, spikes in miner outflows coincided with local price bottoms in March 2023 following the Silicon Valley Bank sell-off and in January 2024 after the U.S. launch of a Bitcoin spot ETF.

At the time of writing, Bitcoin was trading at $59,400.

What’s Next: The ongoing developments in Bitcoin mining and the broader crypto market will be key topics of discussion at Benzinga’s Future of Digital Assets event on Nov. 19, where industry leaders will explore the evolving landscape of digital assets and blockchain technology.

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