- Ethereum’s price has stagnated over recent weeks.
- After peaking at $490 last month, the coin has dropped around 30% to $340 as of this article’s writing.
- At the recent lows, ETH was trading as low as $310.
- Ethereum’s hash rate has continued to march higher despite the price of ETH falling.
- This may be related to the extremely high transaction fees collected by miners over recent weeks and months.
- The spike in transaction fees is related to a result of a growth in the decentralized finance space.
- Certain Defi activities have spurred a strong uptick in transactions, driving the growth of collected fees.
Ethereum Hash Rate Hits Fresh All-Time High
Ethereum’s hash rate just hit a new all-time high despite ETH trading 75% below its all-time high price above $1,400. This metric continues to move higher in the face of a strong drop in the price of ETH since the summer highs of $490; the coin now trades at $340, far below those highs.
CoinMetrics data shows that the ETH hash rate has passed above 250 terrahashes per second, slightly above the highs seen in the middle of 2018. There seems to be somewhat of a lag between price action of Ethereum and the trajectory of the hash rate.
This surge in this leading on-chain metric is likely related to a spike in transaction fees collected by Ethereum miners. This spike in transaction fees is a likely result of an uptick in the demand for transactions spurred by a trend in decentralized finance.
Chart of ETH's hash rate since the start of Janaury 2017 from CoinMetrics, shared by CoinMetrics. Unit on the left is terrahashes per second.
As reported by Bitcoinist previously, data from Glassnode indicates that Ethereum miners collected $166 million in transaction fees in September alone. To put this metric into context, Bitcoin miners collected a relatively measly $26 million in transaction fees.
This means that over the course of last month, ETH miners collected eight times more in transaction fees that its primary competitor.
Alternatives Needed
Ethereum’s extremely high transaction fees may show the need for alternatives. Some commentators have said that the transaction fees that users were paying last month, when it cost dozens of dollars to send one transaction, may limit the upside for ETH.
Alternatives that help to reduce transaction fees for users and increasing the overall user experience may gain traction if Ethereum transaction fees remain high.
Photo by Pietro Jeng on Unsplash Price tags: ethusd, ethbtc Charts from TradingView.com Ethereum's Hash Rate Sets Record Despite ETH Trading 75% Below All-Time High