Bitcoin Miners Unfazed by ATH Difficulty as Hash Rate Rises
Bitcoin mining difficulty is currently high, but miners seem unaffected as the hash rate has only continued to rise recently.
Bitcoin Mining Hashrate Continues Uptrend Despite Increased Difficulty
“Mining hashrate” is an indicator that measures the total amount of computing power currently connected to the Bitcoin network. The value is measured in terms of terahashes per second (TH/s).
When the value of the metric goes up, it means that miners are bringing in more machines online on the network right now. Such a trend shows that the current BTC blockchain is attractive to miners.
On the other hand, the indicator’s drop in value suggests that some miners are disconnecting from the chain at the moment. This kind of trend could mean that miners are not finding it that profitable to mine the cryptocurrency at the moment.
Now, here is a chart showing the trend of the 7-day average Bitcoin mining hashrate over the past year:
The value of the metric seems to have been sharply going up in recent days | Source: Blockchain.com
As shown in the graph above, the 7-day average Bitcoin mining hashrate rose and reached a new high a while back, but in the last days of February, the metric observed a plunge.
However, this decline was only temporary, since the start of this month the indicator has once again shown a strong uptrend and has reached a new all-time high. To understand why the calculation might have behaved this way, the “mining difficulty” data is worth looking at.
Difficulty is a built-in concept on the BTC blockchain that determines how difficult miners currently find it to mine on the chain. The reason this feature exists is that the network aims to keep what is called the “block production rate” constant.
This rate is a measure of how quickly miners mine blocks on the network. Whenever the hash rate changes, this rate naturally fluctuates since the computing power available to the miners is also different.
To counteract such fluctuations, the Bitcoin blockchain switches the difficulty up or down (depending on whether miners are faster or slower now) just enough for the block production rate to return to its default value.
The chart below shows how BTC mining difficulty has changed recently.
Looks like the value of the metric has spiked recently | Source: Blockchain.com
As you can see above, the Bitcoin mining difficulty reached a new all-time high in the last network adjustment after the hash rate also reached a new high. It is because of this increase in difficulty that the hashrate observed the aforementioned plunge.
When miners find it harder to mine (due to the increased difficulty), they earn less income. Therefore, some small miners who had low profits start to see a disconnect when the difficulty increases like this.
However, it is interesting how the hashrate drop was only temporary this time. Miners still continue to add more rigs to the network despite the difficulty of continuing to sit at these ATH levels.
This could be a sign that the bigger players in the mining space are probably still very positive about the future of Bitcoin and find it worthwhile to expand their mining facilities right now.
BTC price
At the time of writing, Bitcoin is trading around $22,400, down 4% in the last week.
The asset has moved sideways since the plunge | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim at Unsplash.com, Charts from TradingView.com, Blockchain.com
