The amount of computing power used by Bitcoin’s network of computers to create new coins has risen dramatically since 2017 despite the drop in the Bitcoin price.
The amount of power that nodes use for mining Bitcoin, or “hashrate”, has risen at an impressive pace and has soared to over 40 EH/s (exahash per second) in June 2018. This is happening despite the recent downward spiral for Bitcoin prices.
This growth should have resulted in a rise of mining profitability, consequently pushing the Bitcoin price, which, again, leads to deployment of even more hashrate.
To be fair, the Bitcoin price has risen suddenly from around $1,000 at the beginning of 2017 to almost $20,000 in December 2017. This led to a huge influx of new miners who added their computing power to the network.
However, the Bitcoin price stumbled again in 2018. Despite that, the hashrate continued to grow, reaching the speed mentioned above. While the hashrate was increasing, the Bitcoin price went down by a third. Although it does take a while for miners to add their computing power to the network after the price rises, the Bitcoin hashrate hasn’t shrunk with the drop in the price. This leads to a conclusion that miners are still interested in mining Bitcoin and that their interest is not faltering.
Consistent growth of hashrate could also mean that the future doesn’t look so bleak for the Bitcoin price. According to Thomas Lee, head of research at Fundstrat Global Advisors and one of Wall Street’s most outspoken Bitcoin bulls, the Bitcoin price will hit $25,000 in 2018, which is 270 percent more than where it is right now.
Lee concluded this by looking at Bitcoin’s historical trading price of 2.5 times its mining costs, which he expects will reach $9,000 by the end of 2018.
However, one shouldn’t be overly confident about Lee’s predictions. His call from December for Bitcoin to reach $20,000 by mid-2018 missed the mark by about $14,000.
Nevertheless, he is not alone in his positive predictions for the Bitcoin price in 2018.
Bart Smith, head of cryptocurrency at trading giant Susquehanna International Group, is confident that Bitcoin is here to stay, praising the cryptocurrency for being the “cryptocurrency of the Internet” and saying that people are using it functionally.
Famous venture capitalist and inspiring entrepreneur Tim Draper said he believes Bitcoin will reach $250,000 by the year 2022. Draper’s predictions had come true in the past, for example when in 2014, he said Bitcoin would reach $10,000 in three years, and it surely did.
Julian Hosp, president, and co-founder of crypto wallet and card start-up TenX, says Bitcoin could hit $60,000 by the end of 2018.
Running Bitcoin uses quite a lot of electricity. Miners consume an incredible amount of megawatt-hours of power to approve transactions and create new Bitcoin for themselves as payment for their efforts. Many experts see this as a problem because the amount of energy used is growing with each day, which is putting pressure on the world’s power grids.
According to some estimates, it takes 556 days to mine a single Bitcoin. One miner consumes 33 kilowatt-hours of electricity each day, so imagine the electricity bills these miners see every month.
The silver lining here is that the graphic processing units (GPUs) manufacturers such as Nvidia and Radeon are in for quite a profit because mining demands powerful GPUs.