Bitcoin’s hashrate, the computational power required to mine a block in a proof-of-work blockchain, is projected to reach 1 zettahash per second before the next halving event in approximately 3.5 years. This milestone is set to put pressure on miners to secure cost-effective power deals and upgrade to more efficient mining equipment.
The average hashrate is expected to hit 1 zettahash per second by 2027, even if it continues to increase at a modest rate of 20% annually. Currently, the hashrate stands at around 787 exahash per second (EH/s) on a seven-day moving average basis, as per data from Glassnode. The exponential growth of the hashrate translates to higher energy costs for miners, emphasizing the importance of optimizing their operations to maintain profitability.
Hashrate is not just crucial for miners’ financial viability but also for enhancing network security. The network security has surged by 56% over the past year, underlining the significance of a robust hashrate in safeguarding the blockchain.
The pace of growth in hashrate gained momentum in the latter half of 2024 following the halving event in April, which slashed block rewards by 50% to 450 BTC per day. This reduction in revenue forced some miners to diversify their operations by venturing into AI computing or purchasing bitcoin directly from the market.
As the hashrate approaches the 1 zettahash per second mark, miners will need to devise innovative strategies to navigate the increasingly competitive market landscape and sustain their operations.
While there are indications that the hashrate may have already reached 1 zettahash per second for a single block, it is crucial to consider the probabilistic nature of mining, block time variability, and short-term network fluctuations. For accurate assessments, it is recommended to rely on a seven-day moving average to mitigate outliers and ensure reliability.
Apart from the surging hashrate, the difficulty of mining a block has also been on the rise. With seven consecutive positive difficulty adjustments since October, the current difficulty level stands at 109.78 trillion (T). The network recalibrates the difficulty every 2,016 blocks to maintain a 10-minute block mining interval. Unlike the scenario in 2021 when China banned mining and witnessed a 50% drop in hashrate, the current trend shows a synchronized increase in both hashrate and difficulty.
The evolution of Bitcoin’s hashrate and mining difficulty underscores the dynamic nature of the cryptocurrency ecosystem, calling for constant adaptation and innovation from miners to thrive in the competitive environment.