It’s a Commodity: Bitcoin demand is white-hot these days. Daily transactions are 66% above the previous cycle high. Transaction fees are 19.3% of bitcoin miner revenue, exceeded in only three months of its history. Great time to be mining? Not so fast. Let’s get back to the basics – bitcoin hashrate. You already know that a hash is a function that takes an input of letters and numbers and spits out an encrypted output. It’s at the core of the blockchain’s security, converting transaction data into a fixed-length string of characters. The hashrate is the computational power being used to process transactions. It’s measured in Exahash per second (EH/s), one quintillion hash computed per second. Bitcoin’s hashrate rose to a record high of more than 364 EH/s, the equivalent of 3.6 million Bitmain S19j computers. The speed of the rise in EH/s is much faster than previous cycles. The hashrate peaked in Nov 2022 and fully recovered in three months. Hashrate peaks in 2018 and 2021 took eight months to reach new highs. There is also far more mining competition. Mining hashrate was less than 150 EH/s when bitcoin first rose above $27,000, 60% lower than the current hashrate! What’s going on? Well, the pipeline of machines ordered during the boom times and idled in last year’s bust are coming online. And they are coming with cheaper marginal sources of power like nuclear and hydroelectric. Bitcoin mining has graduated to an institutional commodity, demanding brutal production efficiency. So, yes, it’s a good time to be a miner…if you are at the low end of the cost curve. Just like it is for any commodity producer.