Bitcoin miners' profitability is an important component of the hashrate. The higher the hashrate, the higher the energy costs.
Bitcoin's (BTC) hashrate, a measure of the computational power used to mine a block in a proof-of-work blockchain, is set to reach 1 zettahash per second (ZH/s) before the next halving event in about 3.5 years, highlighting the increasing energy demands and competitive landscape for miners.
The average hashrate is expected to hit 1 ZH/s, which is equivalent to 1,000 exahash per second (EH/s), by 2027, even if it rises at a conservative rate of 20% per year. Notably, the hashrate has grown an average of 65% per year since 2020 and currently stands at around 787 EH/s on a seven-day moving average, according to Glassnode data.
The hashrate serves as a crucial factor in determining Bitcoin miners' profitability. As the hashrate increases, so do the energy costs, making it essential for miners to optimize their operations to remain competitive and profitable. Moreover, the hashrate contributes to the network's security, which has appreciated by 56% over the past year.
The pace of hashrate growth accelerated in the second half of 2024 following the April halving, which saw the block rewards drop by 50% to 450 BTC per day, reducing the revenue earned by miners. This intense competition led some miners to pivot a portion of their operations to artificial intelligence (AI) computing, while others opted to purchase Bitcoin on the open market.
At 1 ZH/s, miners will be compelled to adopt more innovative strategies to remain solvent and adapt to a demanding market.
Interestingly, a single block's hashrate may have already briefly touched 1 ZH/s, according to an X post on Thursday. However, a single block reading is unreliable due to the probabilistic nature of mining, block time variability, and short-term network fluctuations. Hence, the industry typically considers a seven-day moving average for accuracy.
In addition to the rising hashrate, the difficulty of mining a block is also increasing. Since October, the blockchain has seen seven consecutive positive difficulty adjustments, currently at 109.78 trillion (T). The difficulty adjusts every 2,016 blocks, recalibrating to have blocks mined on average every 10 minutes. The last time the network saw seven consecutive positive adjustments was after China banned mining in 2021, which caused the hashrate to drop by 50%.
This time, however, the hashrate and difficulty are moving in tandem.
