Over the past two weeks, there have been fears that Bitcoin miners have become unprofitable. Early in the month, an image circulated online of Bitcoin miners liquidating thousands of coins, sparking fears of a so-called miner capitulation event.
Recent blockchain data, however, indicates that this is far from the case.
Just three weeks after Bitcoin's difficulty set a new all-time high, the hash rate of the network is following suit. Mining difficulty is a value that determines how difficult it is for miners to mine Bitcoin blocks. The hash rate is the measure of computational power being put to use mining bitcoin at any one moment.
According to BitInfo Charts, the hash rate of the Bitcoin network set a new all-time high of 150 exahashes per second on September 13th. To put this growth into context, the hash rate was 15 exahashes per second, 10% of the current value, on New Year's Eve 2017. Further, the metric sat at 45 exahashes per second on New Year's Eve 2018.
The strength that can be seen amongst Bitcoin miners comes in spite of a correction in the price of Bitcoin. At press time, Bitcoin is trading at around $10,800, which is roughly $1,700 shy of the year-to-date highs near $12,500.
This raises the question of why Bitcoin's hash rate is increasing, even though miners may technically be less profitable.
Ethan Vera, co-founder of HashRateIndex, told the BTC Times that the sizeable increase in hash rate can be attributed to new mining machines arriving at farms around the world:
"Hashrate as represented by the 7 day SMA has increased 7.5% over the week. S19s have begun to arrive in farms, and these higher efficiency machines are being plugged in even at the current mining profitability level of 8 cents per terahash a day."
Regarding the image of miners selling thousands of coins, Vera noted that the analysis of bitcoin flows from mining pool wallets can be "inaccurate and misleading."
"Most mining pools pay on a pay-per-share basis and hold multiple wallets themselves, not all of which can be identified. We have no indication that mining pools in particular were selling off reserves of BTC."
Assuming the Bitcoin price remains stable or increases, the hash rate of the Bitcoin network should continue to increase over time as ASIC machines are installed and new mining technologies are shipped.