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Rising Bitcoin Hash Rate Sets the Stage for Energy Companies
Bitcoin Mining hash rates are important security metrics as they indicate the network’s overall resistance to malicious attacks. Hash rates also measure a blockchain network’s ability to process transactions. Calculations of hash rates can enable miners to predict their profitability.
Changes in hash rates affect mining flexibility, profitability and the number of miners in the network. For proof-of-work networks like Bitcoin, multiple hash rates signify the network’s strength and ability to deter malicious actors. Similarly, reduced hash rates expose the network to cybercriminals.
However, an increased hash rate in a network means more energy costs and difficulty in mining. While the rising Bitcoin hash rate poses problems for miners, it could be a profitable opportunity for major oil companies to join the game.
Bitcoin Hash Rate Hits New All-Time High
According to Blockchain.com, the Bitcoin hash rate has peaked. The calculation achieved 267 exahashes per second (EH/s) on November 1, an increase of almost 60% since January 2022.
Founder of the Capriole Fund, Charles Edwards, commented on the issue of Bitcoin’s increasing hash rate. Edwards said many high-powered executives and oil companies are joining the mining business. A few days ago, the Bitcoin hash rate increased by 9% from an all-time high.
The Capriole founder added that it was not a sign of miner capitulation, but a bullish sentiment. Still, it could prove bearish in the short term since miners sell tokens to cover expenses and maintain business.
He confirmed that major oil companies would soon become top players in the Bitcoin mining community.
Large oil movements suggest imminent mining dominance
Edward’s prediction is already underway. Earlier in 2022, a Bloomberg report revealed that ExxonMobil is partnering with Crusoe Energy Systems to mine BTC in North Dakota. In June, reports indicated that the oil subsidiary of Gazprom, a Russian natural gas company, would supply energy to mining company BitRiver.
The use of gas flare energy, a by-product of crude oil, has increased recently in the Bitcoin mining industry. Earlier in October, YPF, a state-owned energy company in Argentina, announced its plan to convert gas flare energy to power BTC mining.
The examples above highlight the changes by major oil companies in the BTC mining industry. These impacts are likely to increase as time progresses.
Currently, companies with BTC mining as their only source of income are finding it difficult to stay afloat. Each block in the Bitcoin mining network has become more competitive. Energy costs have increased while profitability has fallen sharply.
Recently, Agro Blockchain announced plans to restructure its business strategy and mining hardware sales. Core Scientific filed filings with the SEC and warned investors of impending bankruptcy. Also, BTC 70% price decline from 2021 all-time high is not helping the miners.
