Bitcoin’s total network hash rate briefly spiked to near 700 PH/s (1 PH = 1015 hashes, or encryption procedures), continuing its upward trajectory amid higher bitcoin prices.
The rate quickly retreated to below 600 PH/s shortly after hitting its peak. Currently near 580 PH/s, it is still well above the recent average.
It should be noted that the reported hash rate is an estimation based on the current difficulty levels and the rate of solved blocks by miners. Nevertheless, a spike is often a prelude to what will become the new short-term norm. Furthermore, the approximation is more representative of the true hash rate when accounting for an entire day’s worth of mining.
The total hash rate gravitates towards an equilibrium of slight profitability for network participants. High profitability brings more equipment into the network until the increasing difficulty makes it no longer profitable to do so. Conversely, when prices unexpectedly drop, hardware may depart the network until slight profitability is restored.
After exponential increases in prior years, the recent phenomena of network saturation and bitcoin price declines rendered mining profitable only for those with the most advanced and efficient hardware configurations.
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The hash rate is on pace to roughly double in 2015, despite a stagnant first half of the year. Bitcoin’s miserable decline in 2014 had knocked a large number of miners off the network because they were unable to stay profitable.
The hash rate managed to remain steady at the start of the year because advances in hardware efficiency offset lower bitcoin prices. It rose throughout the summer as prices stabilized and more efficient hardware came online. During the past three months, it accelerated as bitcoin prices rallied to their highest levels in roughly a year. Combined with the advances in hardware efficiency, the hash rate increased by 70% during the period.
The sharp increases in hash rate have resulted in correspondingly steep increases in mining difficulty. The difficulty level, which is automatically adjusted every two weeks to keep block processing times to roughly 10 minutes, is forecast to jump by over 10% to near 80×109 in the next adjustment. It would be the 12th straight increase.