Is hashrate affecting Bitcoin price?
What is the relevance of hashrate?
As most of the crypto enthusiasts already know, hashrate is nothing but overall computing power related to processing transactions within the blockchain of cryptocurrencies. Of course, it applies to Bitcoin as well.
On 8th of September, Blockchain.info has stated, that we are close to reaching for the first time in history 100 quintillion hashes per second (100 000 000 000 000 000 000) and we will keep on rising in the future. As a general rule, the more mining power we have (and the bigger the hashrate), the more secure and stronger the blockchain is. This is because the possible 51% attack threat is becoming less and less possible (more difficult and costly).
But what does it mean for traders?
Where initially all the Bitcoins come from? Miners. The BTC mining facilities mine new blocks using their dedicated ASIC computers. This means that to get one new BTC, there are expenses on the side of miners: the cost of computers, electricity etc. And in general, no company is intended to generate losses.
Therefore, if the market price of BTC is below the operating costs, the miners either quit the business/shut down their facilities or simply HODL the mined Bitcoin and burn some of their prior profits waiting for the better period. This is why during December 2018 bottom, the hashrate low correlated with it.
Yet once the price goes back to the level at least covering the operational costs of those facilities, the ones which had stopped operating are back to work and we observe new ones to come online. This keeps increasing the overall hashrate. And of course - the stronger and healthier the network (due to the hashrate), the more trust there is and the general sentiment (a positive indicator for investors) is rising.
Why BTC hashrate is reaching the all-time top, but the price keeps going sideways?
In the last 3 months (June-September 2019) we are observing the BTC being traded sideways in $9500-$12000 range, yet the hashrate keeps rising to historically high levels. Why is it so? The answer seems to be pretty clear.
First of all - the bear market is over, and miners are not afraid of not making profits while operating. Secondly - if we consider the hashrate behaviour now and in the same period of 2017, we can see similarities. Some analysts, like Max Kaiser, claim that in such case (bear market over, and hashrate rising) the further bull run is followed with the increase of the hash rate, even if it comes with a several month delay.
What can we expect?
The next Bitcoin halving (what is extremely bullish factors) is supposed to take place on May 16th 2020. Therefore the increasing hashrate of Bitcoin means that the miners seem to expect to make huge profits from new all-time highs - as the early bird catches the worm. And there is a high chance that if you buy Bitcoin online [link do nas] now, you will make the same right decision as in early 2017.