During October, the Bitcoin hash rate increased by 10.8%, reaching an all-time high in one day. While increasing the hash rate makes the Bitcoin network more secure, there are many factors that contribute to scaling.
As a result, a high hash rate requires more powerful mining hardware, which can help miners mine a block and earn mining rewards.
As global markets recover from the 2022 chip shortage, prices for graphics processing units (GPUs) – a key component of mining rigs – have fallen to affordable levels. Basically, lower GPU prices helped miners compensate for operating costs in the ongoing bear market.
September 2022 GPU price update Source: Techspot
In addition, mining equipment providers such as Bitmain have lowered the prices of Antminers to return crypto miners to profit. However, as previously reported by Cointelegraph, the return can be around 11 months for large miners and 15 months for retail miners.
Bitcoin miners continue to take advantage of lower mining hardware prices to upgrade their hardware as they strive to stay competitive in the face of fierce competition. Also, major crypto companies such as Grayscale have announced plans to invest in Bitcoin mining hardware.
Increase in the number of crypto-friendly jurisdictions
Since China has imposed a complete ban on cryptocurrency trading and mining, other countries have decided to help the lost Chinese miners by offering a safe haven in their jurisdictions.
Countries including Kazakhstan, Canada and Germany were among the first to choose bitcoin miners when it came to moving their mining operations. As a result, bitcoin mining is becoming more decentralized as it becomes less dependent on China.
However, data from the Cambridge Center for Alternative Finance showed that China had resumed mining just three months after the ban was imposed, further fueling the rise in bitcoin hash rates.
The United States is currently the largest contributor to the bitcoin hash rate, with Georgia leading at 30.8%, followed by Texas (11.2%), Kentucky (10.9%), and New York (9.8%).
Consolidation: Ethereum Moves to Proof of Stake
Ethereum has recently moved from a Proof of Work (PoW) mechanism to a Proof of Stake (PoS) consensus mechanism following an integration upgrade. As a result, Ethereum no longer supports the use of GPUs for mining.
The sudden shift in the mining mechanism naturally forced Ethereum miners to sell or reuse their bitcoin mining hardware.
Despite increased network security, high hash rates may be a cause for concern as USD mining revenues struggle to recover amid the ongoing bear market.