Ethereum’s hashrate hits record high after outperforming Bitcoin in 2021
Data from CryptoCompare shows that the price of Bitcoin started the week at around $51,000 and quickly dropped to test its support at $45,000. The cryptocurrency’s price ended the year around that mark and is now around $47,000.
Ethereum’s Ether – the second-largest cryptocurrency by market capitalisation – moved in a similar way, dropping to a $3,600 low close to the end of the year before recovering. Ether is now trading at $3,800.
Headlines in the cryptocurrency space this week focused on Ethereum’s growth throughout 2021, aided by the rise of decentralised finance (DeFi) applications and the growing popularity of non-fungible tokens (NFTs) which has seen several celebrities join the trend.
Award-winning rapper Eminem, for example, has recently joined the Bored Ape Yacht Club (BAYC) after purchasing an NFT for $462,000.
Over the last 12 months, Ethereum has grown to the point it greatly outperformed the flagship cryptocurrency. Ether’s rise made mining on the network more profitable effectively attracting a greater number of miners who contributed to the network’s hashrate.
In December 2021, Ethereum network participants implemented the Arrow Glacier upgrade, which delayed the network’s transition to a proof-of-stake consensus algorithm. The network’s hashrate has since grown to a record high of one petahash.
The figure is equivalent to around 1,000 TH/s, and shows the network’s hashrate has increased 66,125% since March 2016, when the hashrate started being recorded on the network.
Similarly, the number of Ethereum addresses with a non-zero balance has hit a new all-time high above 71.3 million, surpassing a previous high of 51.49 million seen in December 2020.
NFTs have been growing at such a rapid pace partly because the number of services surrounding them has kept on growing. Over the week the CEO of crypto exchange Kraken revealed the marketplace the firm is creating for NFTs will allow holders to take out NFT-collateralized loans.
Kraken’s larger rivals Binance and FTX have already launched their NFT marketplaces, while Coinbase has a waiting list of millions of people looking to join its NFT marketplace once it launches.
Notably over the week, it was revealed that Ethereum scaling solution Polygon patched a ‘critical’ vulnerability in its proof-of-stake genesis contract that could have allowed attackers to steal over 9.2 billion MATIC tokens, worth over $24 billion.
The vulnerability, which could have allowed for more than 90% of MATIC’s supply to be stolen, was reported on the bug bounty platform Immunefi by a white hat hacker known as Leon Spacewalker.
Similarly, DeFi money market Aave has added a new market using real world assets instead of cryptocurrencies. Aave users are able to lend and borrow using cryptocurrencies, with rates adjusting based on market demand.
MicroStrategy Keeps Accumulating Bitcoin
Late last year, Nasdaq-listed business intelligence firm MicroStrategy revealed it invested $94.2 million to buy 1,914 Bitcoins during December in a move that saw its BTC stash grow to nearly $6 billion in value at current prices.
In a filing with the US Securities and Exchange Commission (SEC), MicroStrategy detailed it now holds 124,391 BTC, acquired at an aggregated purchase price of $3.75 billion and an average price of around $30,159 per bitcoin, including fees and expenses.
The firm has been buying BTC even as the price of the flagship cryptocurrency dropped below $50,000 and failed to breach it over time. Bitcoin’s price may be affected by inflation fears and a looming interest rate rise.
Regulatory decisions may also affect it. Turkey’s President Recep Tayyip Erdoğan is reportedly set to send parliament the country’s draft crypto bill. While Erdoğan hasn’t revealed much about the bill, in September he said the government has “absolutely no intention of embracing cryptocurrencies.”
Aside from Bitcoin and Ethereum, other cryptocurrencies have been seeing exponential growth. The total value locked in decentralised applications built on top of the Terra ecosystem has now surpassed $21 billion, making it the second-largest decentralized finance ecosystem behind only Ethereum, which has over $160 billion in total value locked.
Terra is an open-source blockchain payment platform that accommodates algorithmic stablecoins, the largest one being TerraUSD (UST). It uses a proof-of-stake (PoS) consensus algorithm, and its native token LUNA is “used in the issuance of stablecoins (TerraSDRs), as a price stability mechanism, as well as for staking and network governance”.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.