Why Bitcoin’s Bear Market Hashrate Surge May Not Be Bullish

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 28 October 2022

⏱️ 18 minutes

🔗️ Recording | iTunes | RSS

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Summary

This episode is sponsored by Nexo.io, Circle and FTX US. On today’s episode, NLW catches up on the bitcoin mining industry, and why soaring hashrate and mining difficulty represent something very different in a bear market than they did during the bull. - Nexo Pro allows you to trade on the spot and futures markets with a 50% discount on fees. You always get the best possible prices from all the available liquidity sources and can earn interest or borrow funds as you wait for your next trade. Get started today on pro.nexo.io. - Circle, the sole issuer of the trusted and reliable stablecoin USDC, is our sponsor for today’s show. USDC is a fast, cost-effective solution for global payments at internet speeds. Learn how businesses are taking advantage of these opportunities at Circle’s USDC Hub for Businesses. - FTX US is the safe, regulated way to buy Bitcoin, ETH, SOL and other digital assets. Trade crypto with up to 85% lower fees than top competitors and trade ETH and SOL NFTs with no gas fees and subsidized gas on withdrawals. Sign up at FTX.US today. - “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. Music behind our sponsors today is “War” by Enoch Yang. Image credit: Yuichiro Chino/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.2	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:15.0	The breakdown is sponsored by nexo.io, circle, and FtX, and produced and distributed by CoinDesk.
0:22.8	What's going on, guys? It is Thursday, October 27th, and today we are talking Bitcoin mining.
0:29.0	Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it,
0:32.9	give it a rating, give it a review, or if you want to dive deeper into the conversation,
0:36.5	come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod.
0:42.5	Also a disclosure as always. In addition to them being a sponsor of the show, I also work with
0:46.6	FTX. All right, folks. So as I said, today we are catching up on the Bitcoin mining space.
0:53.1	There is a lot happening here that I think is worth
0:56.1	some deeper consideration. Since the crash in Bitcoin's price during the first half of this year,
1:02.2	something unintuitive has been going on in Bitcoin mining. Hash rate has been going up,
1:07.5	and not just by a little. Hash rate is currently sitting at around 260 X a hash per second.
1:13.8	Those are all-time high levels and 45% higher than the 2021 peak, just before the Chinese
1:19.3	mining ban at the beginning of the summer.
1:21.4	This year, there was one small dip around 13% over the summer, as the Texas electrical
1:26.4	grid exercised its right to curtail mining
1:28.5	activity. And we got news that miners had sold 27% of their Bitcoin stacks on aggregate,
1:33.9	amid rumors of financial stress, and pending bankruptcies within the industry. Since then,
1:38.5	hash rate has been to quote, sue up only. It added 10% in August, 4% in September, and a massive 13% so far this month.
1:49.0	Now, in a bull market, additional hash rate is a positive indicator. It means more miners are
1:54.2	adding to network security and operations are highly profitable. Bare market hash rate increases
	...

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