Despite recently wavering bitcoin prices, the network hash rate for bitcoin mining saw a sudden, massive jump in the last two days. This increase brings it up to an incredible 62 million terahashes per second. Just two days prior, the network saw a hash rate of just over 45 million terahashes. This suggests that even though bitcoin prices have yet to recover, there is still definitely a lot of interest in mining the digital asset.
Bitcoin by the Numbers
To get some context on how significant this hash rate increase is, we need to look back at the recent hash rate trends.
In the last six months, the bitcoin network has seen relatively steady increases in the hash rate. On March 1 of this year, the hash rate stood at 23.3 million terahashes per second. By June, that number increased to nearly 43 million terahashes per second.
Read also: What is a Hash Rate?
This rate stayed somewhat stable until July 28 with the hash rate increasing to an average of over 50 million terahashes per second. It has stayed at that rate for roughly the last 30 days. That is, of course, until this most recent blastoff in mining speed two days ago.
So what does this mean for bitcoin? While it’s impossible to make any concrete conclusions based only on this information alone, a number of highly probable assertions can still be made.
Possibility One – A New Major Mining Farm
One obvious conclusion that could be drawn from this sudden increase is that a major mining operation just went online somewhere. If we can attribute all of the recent growth to a single mining facility going online, that would mean the new facility (if it exists) represents a shockingly large 10 million terahashes per second or more.
If we assume that this increase in hash rate is due to a new mining farm going up, it’s most likely that they were using the latest Bitmain or equivalent mining hardware. With each S9i clocking in at 14.5 terahashes per second, to reach 10 million terahashes per second, such a hypothetical mining facility would need to have a startling 690,000 S9i devices or equivalent.
Possibility Two – Bitmain Has Begun Testing the S11
It is long been rumored that Bitmain will soon be releasing its next generation bitcoin mining device known as the S11.
If we assume that the difference in speed between the S7 and the S9 will be comparable to the upgrade between the S9 and S11, then it is entirely possible that the S11 would have three times the hash rate as the current S9. The S7 had a hash rate of under five terahashes per second, and the S9 has 14.5 in its latest incarnation. In other words, if this trend continues, the S11 would produce approximately 45 terahashes per second, each.
Read also: What is Bitmain?
Bitmain has been known to run their own devices for profit long before ever selling them on the open market. This was demonstrated by the recent Monero hard fork which was done to prevent ASIC devices from mining the privacy currency. Once the fork was completed, the hash rate dropped significantly and in such a way that it suggested that ASIC devices were operating on the network for quite some time before Bitmain even announced their own device.
In short, the spike could be caused by Bitmain or another ASIC manufacturer testing a full production run of top-end devices.
Possibility Three – New Mining Farms Are Launching, Old Ones Coming Back Online
One major issue that occurs when bitcoin prices drop is that mining profitability drops, too. Even the most efficiently designed industrial-scale mining operation has its costs such as electricity, manpower, real estate (like warehouses and power management) and any other number of expenses. As such, if the price drops too much and the mining difficulty is too high, mining farms can actually lose money by operating.
This can also be said of individual or small-scale miners. They too could decide to simply stop mining when it is no longer profitable and start mining again once prices recover.
And so, for our third potential cause for the increase, we think it could be a combination of both old mines coming back online due to the recent increase in price, or it could be new mines coming online. There’s even a chance that Bitmain is testing the S11 now at the same time and all three of these factors combined is what caused the sudden and explosive growth in the network hash rate.
It’s important to remember that at this point, all we can do is speculate as to what is causing the hash rate to increase. Regardless of what is causing it, it does indicate that a lot of money is going towards bitcoin mining. That is in many ways a bullish signal and could help to drive prices up again as confidence in the cryptocurrency powerhouse known as bitcoin begins to recover.
It’s also a certainty that Bitmain is developing next-generation hardware, and that it will most likely be called “S11” in keeping with their naming trend. So far Bitmain has not officially made any statements regarding next-generation bitcoin mining devices aside from the currently available S9eye.