Bitcoin
Bitcoin Mining Gets Harder – Good News for BTC Price or…
- The increase in difficulty drove an increase in daily revenue for miners
- Many miners have withdrawn their BTC, suggesting the currency’s price may fall
According to on-chain data from Glassnode, Bitcoins [BTC] mining difficulty has reached a significant high from the lows of May 22. Bitcoin mining difficulty measures how challenging and time-consuming it is to find the right hash for each block.
Mining difficulty does not always affect the value of BTC. However, it affects its perceived value and its scarcity. An increase in difficulty implies an increase in hash power. In turn, blockages may not be resolved faster and the blockage time may reach 10 minutes.
In terms of price, a increase on this metric may be optimistic. This is because miners can be attracted to validate more transactions on the network.
Source: Glassnode
However, mining difficulty was not the only metric to skyrocket on the network. In fact, another metric that followed suit was Bitcoin’s hash rate.
As the difficulty increases, so does the revenue
If Bitcoin hash rate is high, indicates that the network is secure and healthy. For investors, this increase serves as a guarantee that buying BTC can be profitable in the long term. However, this condition only works if the market condition is in a bullish phase.
On the other hand, a large decline in hash rate indicates changes or risks to the network. In situations like these, miners may have difficulty generating profits from their operations.
Source: Glassnode
As expected, the impact of the increase in mining difficulty and hash rate was reflected in miners’ revenues. In fact, at the time of writing, network data revealed that miner revenue was 558,057 BTC.
This seems to indicate that operators have been working towards confirming more new transactions in the block, compared to what happened on May 21st.
Not everyone is HODLing
AMBCrypto also analyzed the change in miner’s net position. At press time, the metric had a reading of -2,748.69 BTC. Miner Net Position Change tracks the 30-day change in the supply of Bitcoin held at miner addresses.
When this metric is positive, means miners are accumulating more coins. However, the recent decline that has occurred over the past two weeks means that miners are liquidating their holdings.
As such, there is a chance that Bitcoin mining will become more difficult. For the price actionThis could force another cryptocurrency decline.
At press time, BTC was valued at US$68,291, having appreciated by less than 1% in 24 hours after many sideways movements. It is worth keeping an eye on price action as Bitcoin holders may look for other opportunities to cash out in the future.
BTC in circulation drops
From a network perspective, AMBCrypto also analyzed 24-hour active addresses. According to Santiment, 24-hour active addresses on the Bitcoin network were 747 thousand.
This alluded to a significant increase from where the metric was on May 23. Active addresses measure users’ daily interaction on a blockchain, which means the number of Bitcoin transactions has increased since then.
For the price, increased activity could spur currency price appreciation. However, this metric alone cannot determine BTC’s next direction. Therefore, it is also worth considering circulation.
Source: Santíment
To date, one-day circulation has dropped to 33,000, meaning the number of coins involved in transactions has dropped.
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Considering the increase in Bitcoin mining difficulty and activity on the network, the crypto price could see an increase in the medium term. As far as targets go, the value could recover to $73,000.