The Ethereum (ETH) hash rate has surged to a record high of 254 GH/s, beating out the previous record high of 248 GH/s in August 2018. It seems the Decentralized Finance (DeFi) frenzy is the cause of the Ethereum hash rate surging to new highs, and in particular the DeFi frenzy has caused Ethereum’s price to rally from around $110 in March to $330 currently, an increase of 200%.
Basically, since Ethereum is worth a lot more now, mining has become much more lucrative as well, causing a massive influx of miners into the Ethereum network.
Further, Ethereum transaction fees have been elevated due to the DeFi frenzy. Indeed, Ethereum recently had a transaction fee crisis, where transaction fees rose to $15-$20, with fees upwards of $100 for complex transactions like smart contracts.
Although this transaction fee crisis was bad for Ethereum users, it brought in an extra $114 million for Ethereum miners in August, making Ethereum mining even more lucrative and bringing in more miners.
Zooming out, it is interesting that Ethereum’s hash rate is hitting record highs now, since Ethereum 2.0 plans on getting rid of Proof of Work (PoW) mining in the medium term. Basically, Ethereum 2.0 will switch Ethereum to Proof of Stake (PoS), and there will theoretically be no more miners.
That being said, it remains to be seen if Ethereum 2.0 will be purely PoS, since miners would have to approve that change, and it seems unlikely that Ethereum miners would approve their own extinction.
In fact, now that there are more Ethereum miners than ever before, it makes it less likely that Ethereum will ever become purely PoS.
Looking towards the future, it seems the Ethereum hash rate will continue to rise, since the DeFi frenzy is continuing to intensify and is showing no signs of stopping.