Bitcoin Hashrate Could Return to Record Sooner Than Expected

Chinese miners have been speeding up their migration to alternate locales while U.S. miners are expanding their capacity as bitcoin’s price rallies.

Aug 27, 2021 at 4:44 p.m. UTC
Updated Aug 27, 2021 at 5:04 p.m. UTC

Frances Yue is a reporter on CoinDesk's Markets team.

The Bitcoin hashrate, a measure of the total computational power being used to secure the blockchain network, could return to record levels sooner than previously expected as Chinese miners speed up their migration to alternate locales and U.S. miners expand capacity, according to industry experts.

The blockchain network’s hashrate reached its all-time high of roughly 180.6 exahashes per second in mid-May, following the bitcoin price rally early this year. It later plunged to about 84.3 exahashes per second in early July, after China started cracking down on crypto mining.

The seven-day moving average of bitcoin’s hashrate stood at 130 exahashes per second on Thursday, up more than 50% from the July low. And the network appears to be holding steady even after a difficulty adjustment this week that made it harder to mine new bitcoins.

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The bitcoin hashrate has made a powerful recovery in the past month. (Source: Glassnode)

Bitcoin was trading at $47,493 as of press time, gaining 2.9% in the past 24 hours. As recently as last month, the cryptocurrency was changing hands around $30,000, so the strong market may have lured some bitcoin miners back online while encouraging others to ramp up capacity.

The Bitcoin hashrate could return to its all-time high by the end of this year and will likely continue to rise, according to Sam Doctor, chief strategy officer at BitOoda.

“A month or two ago I would have thought that the recovery is still going to be slow and it will be the first quarter next year before we hit the previous high,” Doctor said. “But the hashrate does appear to recover faster.”

The migration of Chinese miners, who have been shipping their rigs to places such as the U.S. and Kazakhstan, have been driving the recovery, according to Doctor.

Poolin, a crypto mining pool previously based in China, looks to build its own facility in the U.S. to host a total capacity of 200 megawatts in the next nine to 18 months. It has already secured a hosting site in the U.S. to resume some operations online, Alejandro De La Torre, vice president at mining pool Poolin, told CoinDesk in July.

“We really wanted to put at least a certain percentage online,” De La Torre said.

“For a lot of very expensive electrical equipment, like substations, transformers, these things take time to build and to buy,” according to De La Torre. “So it’s gonna take a while before we have our own facility.”

In addition to Chinese miners’ migration, American miners have also been expanding their capacity, according to Dave Perrill, CEO of crypto mining colocation company Compute North.

“The large orders that were placed and were in progress prior to the Chinese ban are starting to come online,” he said.

Perrill believes it could take another six to 12 months before bitcoin’s hashrate hits the all-time high again.

“Once we get to the all-time high, you’re gonna see an acceleration,” he said. “And over the course of the next 18 months to 24 months, I think the all-time high will 3x,” meaning it could increase threefold.

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Frances Yue is a reporter on CoinDesk's Markets team.

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Frances Yue is a reporter on CoinDesk's Markets team.

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