Bitcoin’s Hash Rate Hits Record Levels, But Concerns Over Transaction Fees and Block Usage Loom
Despite reaching a new high in hash rate, Bitcoin’s long-term viability is called into question as transaction fees remain low and blocks go underutilized.
The Bitcoin network’s hash rate has seen a remarkable surge, highlighting an increasing disconnect between mining activity and the price of Bitcoin (BTC). According to data from Glassnode, the 14-day moving average of the hash rate recently touched an all-time high of 838 exahashes per second (EH/s), with a 24-hour peak of 974 EH/s, the second highest ever recorded. While this indicates a rise in computational power, longer-term averages provide a more accurate reflection of the network’s health.
In the coming days, Bitcoin’s mining difficulty is expected to increase by over 3%, reaching an all-time high. This adjustment occurs every 2016 blocks, ensuring that block times remain close to the target of 10 minutes. However, the growing hash rate is occurring against a backdrop of prices that remain about 25% below Bitcoin’s previous all-time high, raising questions about the sustainability of mining activity.
For miners to stay profitable, a strong Bitcoin price, high transaction activity, and full blocks with adequate transaction fees are critical. Yet, transaction fees are strikingly low, averaging around 4 BTC per day, roughly valued at $377,634. As Bitcoin’s block reward continues to halve every four years, increased transaction usage becomes vital to keeping miners incentivized.
Adding to the concerns, Bitcoin blocks are often barely filled. Developer Mononaut from Mempool recently pointed out that the Foundry USA Pool mined a block with just seven transactions — one of the least populated blocks in over two years. This starkly contrasts the increasing hash rate, suggesting that while the network is growing stronger, it is operating without significant real-world demand.
This trend of “half-empty” blocks is raising alarms within the community. Nicolas Gregory, the creator of the Mercury Layer and former Nasdaq Board Director, expressed concerns about Bitcoin’s future.
“Half-empty Bitcoin blocks tell a story — pushing the store-of-value narrative could derail Bitcoin’s future,” Gregory commented on X. “Bitcoin needs to be more than just a speculative asset discussed in podcasts and spaces. If it doesn’t gain real-world usage, its future is in jeopardy.”
With the continued reliance on transaction fees and network activity to sustain mining incentives, Bitcoin faces a critical challenge in converting its hash rate into tangible use cases.
