Bitcoin price is trying get back on its bullish path. Network hashrate is nearing an all-time high, and projections suggest a strong finish to the year, with significant growth potential on the horizon. Hashprice is slowly recovering from its recent lows, and a brief spike in transaction fees was driven by the launch of a new staking protocol, Babylon. In this week’s mining economics rundown we will look into the following topics:
Bitcoin Reclaims Its 200-Day Moving Average and Drops Back Below
Network Hashrate Approaching All-Time High
Network Hashrate End-of-Year Projection
Potential Accelerators for Hashrate Growth
Difficulty Taking a Breather
Hashprice Slowly Recovering
Short Uptick Transaction Fees
BTC Locked in Staking Protocol
Fun Fact
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Bitcoin Reclaims Its 200-Day Moving Average and Drops Back Below
Following a sharp price surge over the weekend, Bitcoin reclaimed its position above the 200-Day Moving Average (DMA) for several days. The 200-DMA is a key level closely monitored by traders. Traditionally, crossing above this level is viewed as a bullish signal. Throughout most of August, Bitcoin remained below the 200-DMA, fuelling market concerns and uncertainty. After hopium coming back over the weekend, price dropped back under this indicator at the start of the week. Next step for the bulls would be to reclaim the 200-DMA again and to push back to the top of the range, where the price has spent much of this year.
Network Hashrate Approaching All-Time High
It appears the network hashrate has definitively left the post-halving decline behind. After reaching an all-time high a month ago, the 7-day moving average is now on the verge of breaking into uncharted territory once again but might retrace a bit first as BTC price needs another push..
Network Hashrate End-of-Year Projection
With the current hashrate at 655 EH/s, it has grown by 145 EH/s (28.43%) year-to-date. A year ago, the hashrate stood at 384 EH/s, marking a growth of 271 EH/s (70.57%). Based on the current month-over-month growth rate, the network hashrate is on track to surpass 750 EH/s by year-end 2024.
Potential Accelerators for Hashrate Growth
A continued growth in hashrate at the rate observed over the past 8 to 12 months will require some additional drivers. Here are three potential contributors to sustained hashrate growth:
Deployment of New Machines: Significant orders for the latest and most efficient machines, including the Bitmain Antminer S21 series and the MicroBT Whatsminer M60 series, were placed in Q4 2023 and the first half of 2024. These machines are expected to be deployed in the coming months.
Seasonal Adjustments: With summer ending in hashrate-heavy regions like Texas, miners will reduce their operation curtailment or transition from low to normal power mode. As the temperature cools off there will be a reduction in demand response and risks of overheating hashboards are lower.
Regulatory Changes: A notable development this month is Russia’s official legalization of Bitcoin mining, signalling a significant shift in its stance on digital assets. Similar regulatory changes, as seen this year in Russia and East Africa, are creating new opportunities for miners.
Conversely, a potential factor that might slow network hashrate growth is a rise in natural gas prices. While prices are currently low, some macro analysts anticipate an increase. Fluctuations in energy costs could impact mining profitability.
Difficulty Taking a Breather
At the end of July, the difficulty was adjusted by 10.5%, marking the first double-digit increase since January 2023. After reaching a peak of 90.67T, difficulty decreased by 4.18% on August 14th. The next difficulty adjustment is projected for August 28th and is currently estimated to be around +3%.
Hashprice Slowly Recovering
Since the flash crash at the beginning of August, hashprice has risen from its historic low of $38/PH/Day. A brief increase in transaction fees caused hashprice to surge to $53/PH/Day. Currently, hashprice is around $46/PH/Day. While this revenue level still poses challenges for many miners, it represents a 21% improvement from the record lows.
Short Uptick Transaction Fees
Last week, hashprice experienced a brief increase due to a rise in transaction fees. However, this uptick was short-lived, lasting for less than ten blocks. Compared to the spikes earlier this year, the rise in transaction fees as a percentage of the total block rewards was minimal.
BTC Locked in Staking Protocol
The surge in Bitcoin transaction fees on Thursday was driven by users rushing to lock their BTC into a newly launched staking protocol called Babylon. According to Mempool.space, medium-priority fees spiked as high as 1,557 sat/vB, or approximately $1,286. During this fee surge, seven blocks contained more transaction fees than block subsidies, with the total fees in these blocks exceeding 67 BTC (about $4M).
The fee increase coincided with the mainnet launch of Babylon, which allows users to lock their Bitcoin in designated addresses to gain voting power in a proof-of-stake (PoS) system and earn staking rewards. Babylon offers a trustless, self-custodial script for locking funds for a set period in exchange for PoS voting rights. The mainnet launched with an initial cap of 1,000 BTC and a per-transaction limit of 0.05 BTC, resulting in intense fee competition as users rushed to participate.
Fun Fact
On Sunday, the 18th, the Bitcoin network reached block height 857,400, marking a significant milestone. With this block, 94% of all Bitcoin had been issued, leaving only 1.26 million BTC remaining to be mined.
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ASIC Market Outlook: ASIC Price Development & Efficiency Trends
