Bitcoin (BTC) hashrate has increased 33% in just two days while the price of Bitcoin trails behind.

BTC price & hashrate

Bitcoin hashrate has exploded from 91,290,582 TH/s on April 4 to 121,029,181 TH/s on April 6. Historically, Bitcoin hashrate and price have exhibited a very close relationship, with a 0.77 correlation.

This relationship makes sense considering that the hashrate represents, on the one hand, the production cost of Bitcoin for the miners and, on the other hand, the overall security of the Bitcoin network. In other words, the higher the total hashrate, the more expensive it will be for an adversary to take over the network. This decentralized trust is one of key values that Bitcoin possesses.

Bitcoin Hashrate

Source: Cointelegraph, Quandle

Will the price follow?

Over the same timeframe, the price of Bitcoin has increased only 0.92%. The rapid growth in hashrate comes on the heels of recent favorable adjustment in Bitcoin mining, which itself was precipitated by the previous drop in network hashrate.

If Bitcoin price/hashrate correlation remains constant, we can expect to see a significant price surge. However, these dynamics are further complicated by the impending halving of Bitcon block rewards, which is only 36 days away. 

With everything else remaining constant, after the halving, miner revenue will also be halved. On the other hand, for miner revenue to remain at the same level, the price would have to double (holding mining efficiency constant). The recent surge in Bitcoin hashrate may indicate that the miners are betting on the second scenario.