Highlights:
- The emergence of today’s high-priced, sophisticated bitcoin mining equipment is a possible signal that the price of bitcoin will continue to rise.
- The hashrate-to-price ratio chart is a fresh set of data that has illustrated the last two Bitcoin bear and bull markets, respectively.
- Bitmain’s new fleet of ASICS is more expensive than the last generation, but they are more lucrative and energy efficient.
The hashrate to price ratio may end up being one of the most frequently cited charts to determine whether bitcoin is in a bull or bear market. And The emergence of the latest generation of bitcoin mining technology is a signal that the bitcoin price will remain high.
In short, modern bitcoin mining consists of large data centers filled with specially designed computers called Application Specific Integrated Circuits, or ASIC miners. These Xbox-sized machines are used to protect the network via a concept called proof-of-work. The miners solve random equations by utilizing computational power as they “hash” at the problem. The higher the hashrate, the greater the probability of solving the equation and earning bitcoin.
Bitcoin mining began on simple laptops and computers, but as the price rose, so did the competition (and the computational power). Gradually, then suddenly, everyone wanted the opportunity to mint the next block and be rewarded with fresh new bitcoin. And thus, began the cybernetic arms race for the most energy efficient miners with the highest hashrate.
While buyers and sellers on the market are concerned with the price of bitcoin in terms of supply and demand of the digital asset, bitcoin miners must also take into account the newfound demand of bitcoin hardware.
According to Bitmain, an industry leader in bitcoin mining, the latest air cooled XP miners have a hash rate of 141TH/S, with a price of about $39/TH or $5,499 per unit and the latest hydro cooled XP miners have a hashrate of 250TH/S at a price of $23/Th or $5,750 per unit (of course, the miners hashrate can be overclocked by connecting them to applications that enable users to increase the voltage and megahertz[MHz] of the miner).
Keep in mind these are non-fixed prices and they move up or down in correlation with the price of bitcoin.
Bitmain’s fleet of nex-gen ASICS are much higher than the prices of the last generation, but they are statistically more profitable and energy efficient. During the most recent crypto winter, S19s in the 96T-104T range were priced anywhere from $9-$13 per terahash. Currently, even the last generation of ASICs have seen a slight uptick in price.
The 3-year linear chart on blockchain.com displays the hashrate-to-price ratio of Bitcoin. Despite Bitcoin’s price volatility, the data suggests that there is a steady rise in Bitcoin’s global hashrate.
Although the global hash rate has reached record highs near 400 Exahash (That’s 400 million Terrahash!), the price has lagged amid the everpresent financial and regulatory drama that runs rampant in the TradFi sector.
The hashrate to price ratio chart is also a clear indicator of the two most recent Bitcoin bear and bull markets (The hashrate is usually above the relative price in bear markets and it is below the relative price in bull markets). As Bitcoin’s global hashrate continues to increase, the hashrate to price ratio chart may become one of the most cited charts as to whether bitcoin is in a bull or bear market.
The increased hashrate in bitcoin mining is a potential indicator for a future increase in bitcoin’s value, as demonstrated by the correlation between hashrate and price changes. Bitcoin mining equipment prices mirror this trend as well, with newer, more efficient hardware becoming more expensive but also more lucrative for miners.
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