Bitcoin Hashrate Explodes, Difficulty Set To See Big Uptick
Data shows the Bitcoin mining difficulty is set to see a large positive adjustment as the hashrate continues its sharp growth.
Bitcoin 7-Day Mining Hashrate Continues To Discover New Highs
The “mining hashrate” is an indicator that keeps track of the total amount of computing power that the miners have currently connected to the Bitcoin blockchain.
When the value of this metric goes up, it means that the miners are finding the network profitable right now, so new ones are joining in, and/or old ones are expanding their facilities.
On the other hand, decreasing values suggest some miners have decided to disconnect from the blockchain, potentially because of the cryptocurrency not being profitable to mine currently.
Now, here is a chart that shows the trend in the 7-day average Bitcoin mining hashrate over the past year:
The 7-day average value of the metric seems to have been climbing in recent days | Source: Blockchain.com
As displayed in the above graph, the 7-day average Bitcoin mining hashrate has continued to increase in the last few weeks and has achieved new all-time highs.
The hashrate going up is a constructive sign for the cryptocurrency, as it leads to strengthened security for the network. This is naturally because of the fact that a 51% hack becomes harder to perform the more mining rigs there are to attack.
This is also only given that the new hashrate being added to the network is sufficiently decentralized, as the same few entities controlling the new mining rigs may not provide any advantage to the security.
Interestingly, the hashrate has continued to rise recently despite the price of the asset not having the best of times. Miners’ incomes depend on the price, as the block rewards that they receive for solving blocks on the network are released in BTC, which means that their value naturally changes with the spot price.
A feature of the Bitcoin blockchain is that the rate at which the miners can solve the blocks (and hence, claim the rewards) stays constant. This temporarily breaks, however, whenever these chain validators increase their available mining power (that is, the hashrate).
With the extra power, the miners become faster than intended. To bring them back towards the standard pace, the network adjusts what’s called the “mining difficulty” and increases it, so that miners find it harder to go through blocks.
Because of this restriction, the mining hashrate can also be looked at as a measure of the competition present among these miners. The more its value, the less the share of rewards that every individual miner can receive.
Because of the constant hashrate growth, the mining difficulty has been going up and setting ATHs of its own.
Looks like the indicator has been rising for a while now | Source: Blockchain.com
The recent growth in the hashrate has been particularly sharp, however, and in the next adjustment on the Bitcoin network, the difficulty would increase by more than 7% (should the hashrate maintain around the current levels till then). This adjustment would be among the largest that the chain has seen this year.
BTC difficulty is set to see a large jump next Monday | Source: CoinWarz
Bitcoin has continued its recent downtrend during the past 24 hours as the cryptocurrency has now slipped towards the $26,800 mark.
The price of the asset appears to have been tumbling down during the past few days | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, Blockchain.com