mining

Bitcoin mining fundamentals bullish

Bitcoin’s price might be in a sideways consolidation phase, but Bitcoin mining fundamentals Bullish As Hashrate Hits ATH.

The Bitcoin hashrate has just hit another all-time high, less than 8 weeks after the mining “capitulation” caused by the Bitcoin Halving.

And the seven-day moving average of the Bitcoin hashrate has also just hit another all time high. This reflects the growing confidence of miners who continue to invest in more efficient equipment to remain competitive.

Bitcoin Mining Hashrate Hits All Time High

The Bitcoin mining hashrate is basically the speed at which the Bitcoin network processes the transactions. The combined Bitcoin hashrate is all mining rigs that are working on the Bitcoin network.

After an expected drop in May due to the Bitcoin halving, the Bitcoin hashrate has steadily climbed to a new peak, in less than two months since the halving.

According to blockchain.com, the latest hashrate is 123 million terrahashes per second. This is higher than the previous ATH in March 2020, and is up over 100% year on year.

And as well as the intraday hashrate, according to CoinMetrics, the seven-day weekly moving hashrate also saw an ATH this week.

The image above is the seven-day average of the Bitcoin hashrate, and it’s closely following the daily hashrate.

But as we can see, after the ATH in March, which was followed by the crash from the COVID capitulation, and then the Halving induced drop, the hashrate has steadily climbed back to its new ATHs.

Bitcoin Energy Value Reaches ATH

And that’s not the end of Bitcoin mining bullish fundamentals, as Bitcoin’s energy value also reached a new ATH.

Noted by Charles Edwards, the founder of Capriole Investments, who tweeted:

‘Bitcoin’s Energy Value just hit an all time high. #Bitcoin‘s intrinsic value has never been higher. How can you be bearish?’

Bitcoin’s energy value is the intrinsic value of Bitcoin which is determined by the energy spent to create each one.

It’s a model designed by Edwards, himself, in which he wanted to design a metric for valuing Bitcoin to help traditional investors determine the value of Bitcoin.

According to Edwards, ‘Bitcoin’s fair value is a function of energy input, supply growth rate and a constant representing the fiat dollar value of energy.’

The chart shows how Bitcoin’s energy value has pretty much followed the Bitcoin price.

However, as we can see in the image, the energy value of Bitcoin is at $12,815 — a new ATH, whereas the price is teetering in the $9000s, about 27% lower.

What Does This Mean For The Bitcoin Price?

Everything is looking super bullish for Bitcoin. New hashrate ATH, energy value, but why isn’t the price following?

Markets can be irrational. For much longer than we might expect, too. The price of Bitcoin isn’t too far from the energy value, and taking out the 2017 bubble, we’re not too far from recent ATH either.

But with the hashrate climbing, it means more money is being invested in Bitcoin infrastructure. We see this with the huge investments from mining firms around the world.

Patience and a pair of steel balls, however you identify yourself, is what’s needed when investing in Bitcoin.

But the mining and network fundamentals are looking very strong and that has to be bullish for everyone.

Author: Tommy Limpitlaw

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