On January 3rd, Bitcoin’s hashrate reached an unprecedented milestone, surpassing 1,000 exahashes per second (EH/s) according to data from CoinWarz. This remarkable achievement represents a nearly doubling of the network’s hashrate compared to twelve months ago.
A Brief Look at the Past
In January 2024, Bitcoin’s hashrate hovered around 510 EH/s. However, as this article is being published, the current hashrate has retraced to approximately 780 EH/s. The steady rise in hashrate indicates that miners are increasingly devoting computational resources to securing the blockchain, thereby enhancing network security.
The Impact of Halving on Miners
It’s worth noting that Bitcoin’s April halving reduced mining rewards from 6.25 BTC to 3.125 BTC per block. Nonetheless, miners continue to expand production, underscoring their commitment to securing the network.
Miner Strategies in Response to Headwinds
In 2024, Bitcoin’s robust performance partially offset headwinds associated with the halving. Cash-heavy mining companies like Riot Platforms and CleanSpark have navigated these challenges by acquiring other miners with turn-key facilities to increase near-term hashrate and enhance their power pipeline.
As JPMorgan noted in a December research note shared with Cointelegraph, "miners have acquired other miners with turn-key facilities to increase near-term hashrate and increase their power pipeline." This strategic approach enables mining firms to adapt to the reduced block rewards while maintaining competitiveness.
The Value of BTC Holdings
JPMorgan also highlighted the importance of accumulating BTC on balance sheets. In December, JPMorgan raised price targets for four Bitcoin mining stocks to reflect value from the miners’ electrical power assets and BTC holdings.
MicroStrategy, a software company turned de facto Bitcoin fund, has traded at a roughly 2.4x multiple to the value of its BTC treasury as of Dec. 10. Other notable mining firms, such as Marathon, Riot, and CleanSpark, hold BTC treasuries worth approximately $4.4 billion, $1.7 billion, and $910 million, respectively, according to the BitcoinTreasuries.NET data service.
Institutional Inflows: A Boost for Network Security
Bitcoin’s rising hashrate – and the resultant improvement in network security – is particularly significant as institutional investors increasingly pour capital into BTC exchange-traded funds (ETFs) and other regulated cryptocurrency investment vehicles.
In November, Bitcoin ETFs broke $100 billion in net assets for the first time, according to data from Bloomberg Intelligence. Asset manager Sygnum expects this dynamic to accelerate in 2025 as large institutional investors – including sovereign wealth funds, endowments, and pension funds – add Bitcoin allocations.
Accelerating Institutional Participation
"With improving US regulatory clarity and the potential for Bitcoin to be recognized as a central bank reserve asset, 2025 could mark steep acceleration for institutional participation in crypto assets," said Martin Burgherr, Sygnum’s chief clients officer.
This increasing interest from institutional investors underscores the importance of maintaining network security. As more capital flows into regulated investment vehicles, it is crucial that Bitcoin’s hashrate continues to rise to ensure the network remains secure and resilient.
Conclusion
Bitcoin’s hashrate reaching a new all-time high serves as a testament to the resilience and adaptability of miners in the face of challenges. The steady rise in hashrate indicates a growing commitment to securing the blockchain, which is particularly important as institutional investors increasingly allocate capital to BTC ETFs and other regulated investment vehicles.
As the crypto landscape continues to evolve, it will be essential for Bitcoin’s hashrate to maintain its upward trajectory to support the increasing demand from institutional investors. With improving regulatory clarity and potential recognition of Bitcoin as a central bank reserve asset on the horizon, 2025 is poised to be a pivotal year for institutional participation in cryptocurrency assets.
Sources:
- CoinWarz
- JPMorgan
- Cointelegraph
- Bloomberg Intelligence
- Sygnum
