New data from glassnode and Etherscan shows that the Ethereum hash rate has risen to a 20 month high and this has led some optimistic traders to suggest that the price of Ether will continue to rise to new highs in 2020.
The explosive increase in the Ethereum hash rate seems to be heavily influenced by the rapid growth of the decentralized finance sector (DeFi) and at the close of this edition it stands at around 201,000,000 GH/s, a level not seen since 2018.
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Ethereum network hashrate rises to 2018 levels
In recent weeks, the demand for Ether has increased significantly and, since mid-June, an increasing number of users started using DeFi platforms, leading to the collapse of the Ethereum network.
As a result, transaction fees have started to approach unprecedented levels due to the sudden increase in transactions and increased activity on the DeFi and Uniswap platforms.
Is a higher hash rate good or bad for Ethereum?
The increase in the hash rate, the price of Ether and the increase in fees indicate that user activity on the Ethereum blockchain is increasing. Although the rise in Ethereum has been mainly driven by DeFi, the data shows that the fundamentals of Ethereum have strengthened.
The hash rate of the Ethereum blockchain network has also increased due to increased miners‘ commission income. In periods of network congestion, users often compete with each other by attaching a higher gas cost or transaction fee.
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Competition in the market makes rates sometimes higher, especially when interest in DeFi increases, which makes miners‘ income rise. An increase in revenue would then force more miners to mine at Ethereum, which would cause an increase in the hash rate.
The Glassnode researchers explained that miners‘ earnings from Ethereum commissions recently reached an all-time high of 18%. They said:
„The miners‘ income from Ethereum commissions has skyrocketed in the last two months, reaching an all-time high of about 18% (moving average of 30d). In contrast, this has taken the multiple commission rate (FRM) to levels never before recorded at Ethereum. Created by Teo Leibowitz, the Multiple Commission Rate (FRM) is defined as the ratio of total mining revenues to transaction fees. FRM indicates how secure a chain is once the block rewards are gone“.