Analyst Highlights Disconnect Between Bitcoin Hashrate and Price

The Bitcoin hashrate (14-day Moving Average) has reached an all-time high of 838.7 EH/s, even though the cryptocurrency is trading approximately 25% below its all-time high (ATH). Senior analyst James Van Straten from CoinDesk has raised concerns about this troubling trend.

A recent forecast suggests that following another adjustment in network difficulty, the metric is expected to increase by more than 3%, setting a new historical record. This will put additional strain on the mining economy, as pointed out by the expert.

«In order for miners to remain profitable and cover operational and capital expenses, it is essential to have a high Bitcoin price, full blocks, and high transaction fees,» he emphasized.

Cryptocurrency miners earn their income from block rewards (currently 3.125 BTC after the halving in April 2024) and network fees. However, the volume of these fees is extremely low, averaging around 4 BTC per day.

According to Coin Metrics, in the first quarter, the share of fees in the total income of miners was a mere 1.33%.

«Since the block reward will continue to halve every four years, maintaining consistent or increasing on-chain activity will be crucial for sustaining mining incentives,» stated Van Straten.

Developer Mempool, under the alias mononaut, noted that the Foundry USA mining pool mined the least filled of the non-empty blocks in the past two years, containing only seven transactions. The lowest recorded count was four transactions in January 2023.

Other experts have also highlighted this issue.

«In other words, while the increasing hashrate paints a picture of a rapidly growing network, the nearly empty blocks resemble a powerful train rushing down the tracks but without any passengers,» Van Straten commented.

Regarding this trend, Nicholas Gregory, creator of Mercury Layer and former board member of Nasdaq, expressed his concerns.

«I hope Bitcoin enthusiasts recognize that this space is more than just podcasts, audio rooms on X, and the ‘constant rise’ narrative around digital gold. If we don’t encourage people to use Bitcoin for real commerce, the game is over,» he concluded.

It is worth noting that in February alone, the market capitalization of 14 public miners in the U.S. fell by 22% due to rising network difficulty and a decline in the price of the leading cryptocurrency, as reported here. Bernstein has also lowered target prices for the stocks of some companies for 2025.