Bitcoin hash rate reached new all-time high in May

Activity on Bitcoin’s network is up for the fifth month in a row. That in itself is no coincidence, because from January 21 we can use Bitcoin Ordinals, the protocol with which it is possible to launch NFTs on the Bitcoin blockchain. The hashrate and transaction costs have also risen sharply in May.

Unfortunately, the price did not participate in the increases, because it fell by 8 percent.

Drop in hash rate?

If you ask Reginald Smith of JPMorgan, the hash rate increases are over quickly. In May, the hashrate rose for the fifth month in a row and Smith expects, among other things, that there will be some slowdown in growth.

“Our feeling is that hash rate growth will slow down a bit in the coming months as there are few mining devices available to the market,” said Smith.

As for the market cap of listed miners, we saw an increase of 5.0 percent to $ 6.7 billion last month. This means that the market for listed miners in the United States is starting to take on a considerable size.

Difficulty level up

Along with the hashrate, the difficulty of mining new Bitcoin has also increased. That in itself is not surprising, because these two indicators usually move quite synchronously. As the hashrate increases, the difficulty level increases to ensure that a block is added every 10 minutes according to the rules.

If the difficulty did not adjust and the hashrate increased, the blocks would come in at a much higher rate. Without the difficulty adjustment contained in Bitcoin’s code, all 21 million Bitcoin would already be on the market right now.

Thanks to that ingenious mechanism by Satoshi Nakamoto, the issuance of new Bitcoin remains stable and predictable. Not only the hashrate and the difficulty, but also the transaction costs have increased to more than 5 Bitcoin per block in May.

That ensures that the mining industry was able to record decent profits in the first quarter of 2023. All thanks to the rise of Bitcoin Ordinals, which resulted in a huge amount of transactions.

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