Bitcoin Price and Hashrate both form Yearly HighsShare The price is generally the most important variable in miner profitability. Both price and hash rates have recently moved to 2019 highs. Such movements have a material impact on the profits miners can expect but recent regulatory developments in China pose a threat to the levels of hash rate. Key Takeaways: The price of bitcoin and the hash rate of the network have recently formed new highs for 2019A proposed mining ban in China poses a threat to hash rate but there is evidence that miners have been successfully transitioning operations The price of bitcoin formed a new 2019 high this month. With the price generally being the most important variable playing into miner profitability, conditions for miners are quickly changing. Numerous mining profitability studies have been reporting increased profits for bitcoin miners recently. Hash Rate Seven-Day Moving Average Price and Hash Rate Form New 2019 Highs After Asynchronous Movements Hash rate serves an important role in securing the network against attacks. Changes in the price of bitcoin and changes in the Bitcoin network hash rate have been moving asynchronously for most of 2018 with prices decreasing and hash rate increasing. The asynchronous movements are reflected in the distance of both the price and hash rate from their respective all-time highs. Even with the recent price increases, bitcoin remains 71% from it’s all-time highs. However, the hash rate lies only 20% from it’s all-time highs. 1/ Hashrate reversed trends q/q, increasing 12% and has almost doubled over the past year (as of 3/31). pic.twitter.com/NKf1yTtBAd— Circle Research (@ResearchCircle) May 2, 2019 Circle Research also reported on the hash rate in their presentation of data in their Q1 2019 80-page review. Quarter-on-quarter, an increase of 12% has been observed in the hash rate with the metric almost doubling over the past twelve months. An increasing hash rate is driven by either a greater number of miners securing the network or more powerful hardware deployed to mine the network. We have seen the release of several ASIC hardware devices over the past 12 months with increased hash rate capabilities. We are now observing both the hash rate and the price of bitcoin increasing in synchrony. Such a phenomenon is great for the network. The hash rate increases security and the price appreciation further increases the incentive for additional hash rate to join the network. However, the increase in both hash rate and price is a mixed bag for miners. While the price increases profitability, the increase in hash rate will result in an increase in network difficulty and a more competitive mining environment. Threats to hash rate Although the hash rate has almost doubled over the past year, a potential mining ban in China currently looms as a threat. The National Development and Reform Commission (NDRC), a body with the power to dismantle entire industries in China, has pushed a resolution to ban cryptocurrency mining to public comment until May 7th. With no phaseout plan specified, Reuters has noted that there is the possibility that mining operations may be forced immediately shut down after this date. With an estimated 60% of the Bitcoin hash rate expected to be sourced from miners in China, such a ban would likely have a material impact on hash rate. However, there is evidence that miners have been preparing to relocate operations. There have been reports that miners have been seeking to relocate operations to jurisdictions with more crypto-friendly regulation. If miners can successfully transition their operations ahead of or in response to such a mining ban, the impact on hash rate may be negligible.