Latest / The Cryptocurrency Economy with Fexingo: Bitcoin, Ethereum, and Digital Money Markets / Why Bitcoin Hashrate Is Hitting New Highs While Price Stalls
Transcript
- Lucas: So we start today with a number that's hard to ignore: sixty-two thousand, eight hundred thirty-eight dollars. That's Bitcoin's price as of this morning. Down about one percent over five days, basically flat for weeks. Luna: Right. And normally when price stalls, you'd expect some of the network metrics to stall too. But that's not what's happening. Lucas: Exactly the opposite. Bitcoin's hashrate — the total computing power securing the network — hit a new all-time high this week. We're looking at roughly seven hundred exahashes per second. That's a record. And it's happening while price is essentially going sideways. Luna: So miners are pouring more machines online even though they're not getting a price boost. That seems counterintuitive. Lucas: It does, until you look at what happened in April. The 2026 halving cut the block subsidy from 6.25 Bitcoin to 3.125 Bitcoin per block. So miners lost half their coinbase revenue overnight. The immediate reaction was a drop in hashrate as older, less efficient rigs got unplugged. Luna: Right, we saw that — hashprice, which is revenue per unit of hashrate, tanked. Lucas: It hit an all-time low shortly after the halving. But then something interesting happened. Instead of continuing to decline, hashrate started climbing back. And now it's above pre-halving levels. Luna: What changed? Did the price rally enough to make mining profitable again? Lucas: Partially. Bitcoin's price has recovered from the post-halving dip, but it's still below the peak we saw earlier this year. The bigger factor is that miners have been upgrading their fleets. Newer ASICs, like the Antminer S21 and the Whatsminer M66, are significantly more efficient. They can turn a profit even at lower Bitcoin prices. Luna: So it's a technology arms race. The old inefficient machines are being replaced by the next generation. Lucas: Exactly. And we're also seeing a shift in where mining happens. A lot of capacity that went offline in China after the 2021 ban has been rebuilt in the U.S., Kazakhstan, and parts of Latin America — often with better power deals. Some miners are using stranded natural gas or flare gas, which brings electricity costs close to zero. Luna: That's a huge competitive advantage. But doesn't the rising hashrate also mean the network difficulty adjusts upward, which then squeezes margins again? Lucas: It does. Difficulty adjusts every 2,016 blocks — roughly every two weeks. So as more hashrate comes online, difficulty rises, and each individual miner's share of the pie shrinks. That's the self-correcting mechanism. But miners are betting that the price will be higher in the future, so they're willing to accept thinner margins now. Luna: That's a bet on forward price. And historically, hashrate bottoms have sometimes preceded price bottoms. Not always, but there's a pattern. Lucas: Right. If you look at 2018, 2020, and 2022 — periods where hashrate declined and then bottomed — price often followed a few weeks or months later. The logic is that when weak miners capitulate and strong miners keep hashing, the network gets healthier and the remaining supply is more concentrated among committed players. Luna: So this current hashrate record, despite price stagnation, could be a bullish signal. But is there any risk? Like, could hashrate get too high and make mining unprofitable for everyone? Lucas: Theoretically, if electricity costs are high and Bitcoin price stays flat, you could see a margin crunch. But the adjustment mechanism prevents a total collapse — difficulty drops when miners leave. The bigger risk is concentration. If a few large mining pools control too much hashrate, that introduces centralization risk. The top three pools — Foundry USA, Antpool, and F2Pool — now control over sixty percent of the network. Luna: That's a concern from a decentralization standpoint. But listeners might wonder: does any of this matter for someone who just holds Bitcoin in a wallet? Lucas: It matters a lot, because hashrate is a proxy for security and miner conviction. A rising hashrate means the network is more secure, which supports the value proposition. And miner behavior influences selling pressure. When miners are profitable, they sell less of their Bitcoin to cover costs. When they're struggling, they're forced to sell. So watching hashrate can give you clues about future supply dynamics. Luna: And what about the broader macro picture? The Fed minutes that came out yesterday showed officials were split on rate direction. The effective federal funds rate is still at 3.63 percent. Lucas: That split is important because it means uncertainty. Some Fed officials want to cut, some want to hold, maybe even hike. That's not a great environment for risk assets like crypto. But Bitcoin has actually been relatively stable during this period, which some analysts interpret as a sign of maturation. It's not as tightly correlated to Fed policy as it was in 2022. Luna: So the narrative that Bitcoin is a hedge against central bank policy keeps getting tested. Lucas: It does. And the hashrate story adds another layer. While the macro picture is fuzzy, the on-chain fundamentals are actually strengthening. That divergence is what makes this period interesting. Luna: Let's zoom in on one specific miner — maybe Marathon Digital or Riot Platforms. How are they positioning? Lucas: Marathon recently announced they've increased their hash rate target to fifty exahashes by the end of the year. They've been aggressively buying new rigs and have secured low-cost power contracts in Texas and Nebraska. Riot, similarly, is expanding its facility in Texas. Both are using a strategy of holding Bitcoin on their balance sheets rather than selling immediately. Luna: That's a bet that price will eventually catch up to hashrate. If it doesn't, they could get squeezed. Lucas: Exactly. And that's where the equity markets come in. Marathon's stock — ticker MARA — has been volatile, trading like a leveraged play on Bitcoin. It's down about fifteen percent year to date, even though Bitcoin is up. So the market is pricing in some risk. Luna: Which brings us back to the core question: when does the price follow the hashrate? Lucas: Nobody knows the exact timing, but historical patterns suggest it's a matter of months, not years. If we look at the last two cycles, hashrate bottomed two to three months before price bottomed. Right now, hashrate is not bottoming — it's hitting new highs. That's actually more bullish. It means miners are confident enough to invest in new capacity. Luna: So you're saying the hashrate record is a leading indicator, not a lagging one. Lucas: In my view, yes. But I'd add one caveat: the halving changed the subsidy math so dramatically that this cycle might behave differently. We're in uncharted territory with the lowest inflation rate Bitcoin has ever had — about 0.8 percent annualized. That means every new supply has a bigger impact per unit. Luna: Right, the stock to flow ratio is getting closer to that of gold. Lucas: Exactly. So the hashrate surge tells us that miners are doubling down on the long-term value proposition. And if you believe in that thesis, the current price zone around sixty-two thousand might look cheap in hindsight. Luna: You know, this kind of analysis is exactly why people keep coming back to this show. It's making sense of the numbers without the hype. Lucas: And honestly, the reason we can do that without ads every two minutes is because listeners like you support it directly. If today's episode made something click, you can help keep it ad-free at buy me a coffee dot com slash fexingo. Luna: Yeah, it's a small gesture that goes a long way. We really appreciate it. Lucas: So back to the data. Another interesting angle is the fee market. Since the halving, transaction fees have become a larger share of miner revenue — as high as fifteen percent on some days. That's partly due to the Ordinals and BRC-20 activity, which are creating demand for block space. Luna: So fees are supplementing the reduced subsidy. That's actually a healthy development for long-term security. Lucas: It is. The idea is that as the subsidy dwindles, fees need to pick up the slack. Right now, they're doing that — sporadically, but the trend is upward. If that continues, the hashrate could keep climbing even if the price takes time to rally. Luna: So the network is healing itself. Miners are becoming less dependent on subsidy and more driven by actual usage. Lucas: Exactly. And that's the kind of fundamental shift that doesn't show up on a price chart. So for anyone watching the price and wondering what's going on, the real action is in the hashrate, the fee market, and the miner balance sheets. Luna: Alright, next episode we'll look at whether Ethereum is seeing a similar dynamic with its staking yield. Thanks for joining. Lucas: See you next time.