"Why isn't it good news anyway? Who will be affected?”
As Bitcoin (BTC) surged more than 150% in 2023, the cryptocurrency's hash rate of 544 exahshes* per second (EH/s) managed to break a record on December 25, 2023 when it marked an incredible 130% climb since January.
*1 quintillion hashes per second, usually mining large pools or entire networks
There is no denying that increased hash rate is a critical indicator for network security and efficiency, but be aware that it can put pressure on miners who are already struggling with declining profits.
The decline in profits is not only due to the pressure of high fees continuing in the BTC pool but also the backlog of unconfirmed transactions, so that can increase costs for miners and in turn lead to high transaction fees for users.
Although occasional increases in transaction fees occur during periods of high demand, persistent mempool** congestion is still a very important concern for miners and users.
**A list of pending transactions awaiting confirmation from a node before they are committed to a block on the blockchain
Miners' fees reaching near all-time highs have reflected peaks in hash rate and difficulty, commented one analyst, adding that BTC's fundamentals remain strong despite prolonged mempool congestion.
Likely to be informed that the increasing hash rate signal can increase the security of the network which could potentially push the price of BTC to see more significant increases in the future.
In 2023, BTC miners' daily transaction fee income is about $2 million while the combined daily revenue from block rewards and transaction fees this month reached $64 million, an impressive 400% increase from year-to-date (YTD) figures.
As of this writing, BTC price has plunged by 2.66% at $42,376 in the last 24 hours with a market cap of $829 billion and has recorded a 0.06% decline over the past week.
