In an impressive demonstration of digital might, the Bitcoin network’s computational power surged to unprecedented levels, signaling unflagging growth and resilience within the cryptocurrency landscape. The remarkable upswing in the network’s hashrate—its highest to date—occurred as a direct response to the landmark approval of spot Bitcoin Exchange Traded Funds (ETFs) in the United States.
Bitcoin’s hashrate, the metric that quantifies the collective processing power deployed to mine new bitcoins and validate transactions, has been on an unwavering ascent. This persistent increase attests to Bitcoin’s status as the paramount secure cryptocurrency network—a testament to the faith placed in it by the miners and the community at large. From the beginning of 2023, the network’s hashrate escalated from 266 exahashes per second (EH/s) up to 598 EH/s by the year’s end—a staggering 125% growth within the year alone.
This growth trajectory reached its zenith on January 11 when it peaked at a groundbreaking 630 EH/s. It was no mere happenstance that this surge aligned with the SEC’s historic decision to approve the much-anticipated US Bitcoin Spot ETFs. This regulatory milestone has paved the way for mainstream investors to engage with the premier cryptocurrency through a new investment vehicle without the need for direct asset ownership.
The consequent reaction was a blistering wave of activity within Bitcoin markets, propelling on-chain transaction volumes to heights unseen since the FTX crypto exchange’s decline. This surge also boosted the hashrate, hinting at a collective ramp-up by miners in expectation of more engagement and market activity following the ETFs’ introduction.
Despite the anticipated influx of interest and trading volume resulting from the spot ETFs, Bitcoin’s valuation trajectory has parted ways with this positive momentum. A preliminary surge positioned Bitcoin’s price beyond the $48,600 mark, a peak not reached since April of the previous year. Nevertheless, this rally quickly reversed, hinting at a market phenomenon often termed a “sell the news event.”
At the time of reporting, Bitcoin has slipped 11% from its recent high, currently exchanging hands at just over $43,000. A corresponding decline in trading volume, plummeting by 62% within a 24-hour frame, buttressed this downtrend.
In a striking contradiction to these developments, Bitcoin mining profitability, which enjoyed an upward trend in December, has not echoed the euphoria around the ETF approvals. With a downturn in Bitcoin’s price points, mining profitability dipped to a mere $0.07958 per terahash/second daily as of January 13—a sharp 22% fall since the start of the month.
Investors and enthusiasts now stand at a crossroads, contemplating the impact of these twin developments—the breakthrough of Bitcoin’s spot ETFs and the oscillations in price and mining returns—on the digital asset’s future and the broader cryptocurrency domain.