2020 was unforgettable, especially for Bitcoin. To help memorialize this year for our readers, we asked our network of contributors to reflect on Bitcoin’s price action, technological development, community growth and more in 2020, and to reflect on what all of this might mean for 2021. These writers responded with a collection of thoughtful and thought-provoking articles. Click here to read all of the stories from our End Of Year 2020 Series.
It is likely that 2020 will be remembered by most as a year of hardship, lockdowns, masks and lonesome holidays.
While the world has been chaotically dealing with pandemics and politics throughout this year, Bitcoiners have been building. The last 12 months have been big for Bitcoin, the entire ecosystem and bitcoin mining in particular. Let’s take a look at a few aspects of how bitcoin has strengthened throughout 2020.
The Hash Rate
Bitcoin’s hash rate has seen incredibly strong growth this year. The amount of hash rate (computational work dedicated to finding the next bitcoin block) started off this year around 100 Eh/s — an immense amount of computational work.
By the end of October, this number had risen by about 50 percent to 150 Eh/s. The hash rate has dipped since October, but it is still up about 35 percent on the year.
This growth is very strong and serves as evidence that more bitcoin miners are entering the market, as well as evidence that current miners are investing to increase their hash rate.
This is an especially bullish data point considering the bitcoin block reward was cut by 50 percent in May of this year, directly impacting the amount of bitcoin that miners earn. Critics often refer to a “mining death spiral” — a situation in which the price drops in combination with the block-subsidy halving and causes bitcoin to fail indefinitely.
Many said that this could happen in 2020, however we have seen the complete opposite. We have seen sovereign nations nationalize their mining pools and effectively sell their hydrocarbons to the bitcoin network. We have seen large oil and gas companies invest large amounts of capital in order to mitigate their waste energy by converting that energy to computational work and mining the bitcoin network. We have seen nothing but growth in the bitcoin mining sector and, in my opinion, this is the most important indicator of bitcoin’s overall health. Bullish.