Top 3 Reasons Why Bitcoin Hash Rate Continues to Achieve New All-Time Highs

Throughout the month of October, Bitcoin’s hash rate increased by 10.8% as it registered new records on a daily basis. While the increase in hash rate ensures greater security for the Bitcoin network, a number of factors contribute to the calculation.

Falling prices for mining rigs

Hash rate is related to the computing power required by Bitcoin (BTC) miners to mine a block. As a result, a higher hash rate requires stronger mining rigs that can help miners mine a block and earn mining rewards.

As global markets recovered from chip shortages in 2022, prices of graphics processing units (GPUs) – a key component of mining rigs – came down to a reasonable value. Lower GPU prices initially helped miners offset their operating costs amid an ongoing bear market.

In addition, mining rig providers such as Bitmain slashed the prices of Antminers in an attempt to bring crypto miners back into profit. However, as previously reported by Cointelegraph, the return on investment can be around 11 months for large-scale miners and 15 months for retail miners.

Bitcoin miners continue to take advantage of the falling mining rig prices to upgrade their equipment as they aim to remain competitive in the fierce competition. Moreover, major crypto firms such as Grayscale have also revealed plans to invest in Bitcoin mining hardware.

Increasingly crypto-friendly jurisdictions

Ever since China imposed a blanket ban on crypto trading and mining, other countries decided to help the misplaced Chinese miners by offering a safe haven in their own jurisdictions.

Countries including Kazakhstan, Canada and Germany, among others, were among the first choices for Bitcoin miners when it came to relocating their mining operations. As a result, Bitcoin mining became more decentralized as it became less dependent on China.

However, data from the Cambridge Center for Alternative Finance showed that China resumed mining just three months after the ban was imposed, further contributing to the increase in Bitcoin’s hash rate.

The US currently tops as the largest contributor to the Bitcoin hash rate, with Georgia leading at 30.8%, followed by Texas (11.2%), Kentucky (10.9%) and New York (9.8%).

The Merge: Ethereum’s transition to proof-of-stake

Ethereum recently switched from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism after the Merge upgrade. As a result, Ethereum no longer supports the use of GPUs for mining.

The sudden shift in the mining mechanism naturally forced Ethereum miners to sell or use their equipment to mine Bitcoin.

Despite the increased network security, the rising hash rate could become a cause for concern as mining revenues in terms of US dollars struggle to recover amid the ongoing bear market.