Bitcoin Network Doubles to 2 PH/s in Four Weeks; the First 1 PH/s Took 4.7 Years

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In mid-September, after 4.75 years in existence, the bitcoin network reached an estimated hash rate of 1 petahash per second. Remarkably, the second petahash took just one more month, pushing network speed over 2 PH/s this past weekend, or 80x the speed on January 1 of this year. This growth is primarily attributable to new ASIC bitcoin miners from KnCMiner and BTCGarden recently being added to the network, and is a trend that is not expected to stop any time soon.

network growth

KnC was the first manufacturer to demonstrate a 28nm ASIC bitcoin miner on September 30 and started shipping to customers several days later. The 450 TH/s of batch 1 orders they pre-sold represents 20% of the current network speed. The shortened timeline for testing has impacted quality, with reports of KnC hosted miners hashing at one quarter their expected speed and shipped miners circuit boards exploding. Currently they appear to be about halfway through shipping their pre-orders. For several months they have been advertising an October 15th deadline to ship all batch one orders and with that looming 1 day away it it seems likely that that network will soon see these miners coming online.

Another factor in the in the recent speed increase was BTCGarden producing a working 130nm ASIC miner. After a failed IPO citing legal concerns in China they have pressed forward producing 220 TH/s in their first batch. They intend to self-mine with 100 TH/s of it, while planning to sell the other 150 TH/s on their website with an expected 10-day shipping time. They have demonstrated operational hosted miners (pictured below), but none of their miners have been reported in customers hands yet.

Not to be overlooked is the growth of private mining operations as well. As slimming margins push consumer mining products out of viability for positive return, a greater proportion of the bitcoin network is likely to come from private or cloud-based operations. The broader trend of significant growth is expected to continue for the foreseeable future, as most of the capital invested in bitcoin mining has not yet been converted into functional hashing power. For a detailed analysis of upcoming supply and forward-looking hash rate projections, see our 4Q Outlook.

The impact this is having on the rate of issuance of new bitcoin has been dramatic. While the bitcoin network targets 10 minutes between blocks, the average conformation time has been significantly lower for nearly all of 2013 and averaging less than five minutes per block recently.  With 25 new bitcoin issued per block, this also means monetary inflation is occurring at double the expected rate. For a more detailed overview of the impact of this, see our piece on the topic from earlier this year.

effects of hash rate growth

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