Bitcoin (BTC) experienced a volatile 2021 as the price of the digital asset touched an all-time high of almost $69,000 in November but lost nearly 25% of its value in the following weeks. Despite a turbulent year, BTC is still up by approximately 80% in 2021.
BTC mining hash rate, one of the key drivers of Bitcoin’s network activity, witnessed a sharp rise despite China’s crypto mining ban. Earlier this year, China, once known as the hub of global Bitcoin miners, announced a complete ban on the mining of digital assets.
The mining rate crashed by more than 50% following the announcement but recovered quickly as large BTC miners shifted to other locations like North America and Europe. The recent data compiled by Glassnode shows that the Bitcoin mining hash rate jumped by 27% this year.
“Hash-rate started 2021 at around 143 EH/s and increased to what was then an ATH of 180 EH/s in mid-May. This was followed by a precipitous decline of 53%, as miners in China were forced to cease operations, and relocate, or redistribute their hardware to new jurisdictions. Incredibly, the mining market has completely recovered from this enormous shift, with hash-rate pushing to new ATHs at 182 EH/s, closing out the year 27% higher. The success of this transition in the mining market is driven by the free-market incentive of miner revenue, offered by the Bitcoin protocol as a reward for solving blocks,” Glassnode noted.
Key Developments
BTC’s exchange supply has dropped significantly this year. In 2021, Bitcoin’s net yearly exchange outflows stood at almost 68,000 BTC. Long-term Bitcoin holders added 1.8 million coins to their holdings. In contrast, short-term supply decreased by 1.4 million BTC.
“All-in-all, 2021 has been a wild ride for Bitcoin investors, traders, HODLers, analysts, miners and critics alike. The protocol saw Taproot implemented, miners' relocate out of the historically dominant location, and multiple rolls of the FUD dice landing on all sides at least twice,” Glassnode added.
