### Miners are incentivized to increase hashpower to gain a larger slice of a shrinking pie (bitcoin incentives get cut in half roughly every four years), and the arms-race isn’t slowing down.  



In October 2022, even with an uninspiringly low bitcoin price and uncharacteristically low volatility, the hashrate of bitcoin has gone up over 10% Cointelegraph has an insightful [article](https://cointelegraph.com/news/top-3-reasons-why-bitcoin-hash-rate-continues-to-attain-new-all-time-highs) on why the hashrate keeps going up. 

For us, we focus on whether an increasing hashrate is bullish for bitcoin. We think it’s a mixed bag. Miners, unlike other BTC holders have huge running costs. In theory, they are shouldering the cost of keeping the network secure, and get paid back in bitcoins.  

The problem with an increasing hashrate is that each miner is incentivized to spend more for a larger share of a shrinking pie. So, a higher hash rate is the double whammy in a bear market. The miner’s predicament is low prices and constantly lower rewards. 

The good side is rather long term in nature: First, energy efficiency, better algorithms, lower production cost of mining rigs are all incentivized. Second, the network grows more and more secure particularly because it gets more and more expensive to do a 51% attack. 

From a short term perspective (months), we believe that a higher hash rate isn’t necessarily bullish as it can cause miners to need to sell more bitcoin and even potentially create a ‘loop’: as miners sell more, the price falls more and then causes miners to need to sell more. 

From a long term perspective (years), we believe that a constantly increasing hashrate is bullish because it shows confidence in the bitcoin network, and in the long-term outlook of bitcoin’s increasing price against FIAT currency. Another angle is that miners are businessmen who are allocating capital. 

It is probably a safe assumption that the folks allocating capital have ‘done their homework’ and if they continue to invest into mining bitcoin, well, they must know something that isn’t so evident in this bitcoin bear market. 

We think it’s not that secret and that most people do know that the bitcoin price will go up. But, for some reason or another, people don’t act on that knowledge, well until it’s a bit late in the hype cycle. 

All told we like the trend that is evident in the bitcoin hashrate. We think it supports our deep belief in the power and usefulness of cost averaging over the long-term. We’ll keep watching this indicator and continue to share insights with the CryptoFlashReport community.

Miners are incentivized to increase hashpower to gain a larger slice of a shrinking pie (bitcoin incentives get cut in half roughly every four years), and the arms-race isn’t slowing down.

Wed Nov 02 2022

Bitcoin's (Hashrate) Arms Race Continues

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Prototype Global Cryptoasset Mapping System Developed

Wed Nov 02 2022 Bitcoin's (Hashrate) Arms Race Continues

Ferrari to Accept Crypto Payments in the US; Plans to Include Europe Underway

Prototype Global Cryptoasset Mapping System Developed

FTX Founder Sam Bankman-Fried Sent to Jail for Alleged Witness Tampering

Huobi Rocked by Reports of Executive Arrests and Accusations of Customer Fund Misuse

Breaking The Chains: Introducing BRC-69, The Bitcoin Standard Without Data Restrictions

Prototype Global Cryptoasset Mapping System Developed

Wed Nov 02 2022

Bitcoin's (Hashrate) Arms Race Continues