Fundstrat Advisors, a market research firm owned by prominent Bitcoin bull Tom Lee, posted an analysis this week showing that the Bitcoin hash rate has doubled since May, despite a price correction of more than 30%.
Despite $BTC bear market, hashpower doubled since May to 57 EH/s – Even with upgrades to existing equipment, implies almost 1GW of new power consumption vs 5.2GW in May '18. Breakeven now $7300 ($5300 cash BE) vs. $6000 in May – Mining becoming FCF -ive @fundstrat #Crypto pic.twitter.com/pTTWJWlrz0
— Sam Doctor (@fundstratQuant) September 14, 2018
According to the tweet, which was posted by quantitative analyst Sam Doctor, the global hash rate for Bitcoin has increased to 57 EH/s. As a point of reference, this same hash rate first surpassed 1 EH/s back in 2016, indicating that mining operations continue to ramp up given the gains in the last few months.
Doctor’s analysis also showed that the break-even cost of mining 1 Bitcoin stands at $7,300, up from $6,000 in May. This calculation includes the depreciation costs of mining equipment and suggests the “fair price” of Bitcoin. Given this information, the cost of mining 1 BTC is roughly 12% higher than current prices.
While an increasing global hash rate is a sign of health for the Bitcoin network, it ultimately squeezes out lower end miners, giving more network control to the larger mining pools.
For instance, Bitmain, which designs application-specific integrated circuit (ASIC) chips and manufacturers cryptocurrency miners, currently owns two of the largest Bitcoin mining pools, BTC.com and Antpool, which account for 18.5% and 13.1% of the total network, respectively.
This sort of control worries some that a potential future 51% attack could be possible against the Bitcoin network, which has led many altcoins to adopt ASIC-resistant mining algorithms.
More: Sam Doctor’s Tweet
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.