Bitcoin Miners Unfazed By ATH Difficulty As Hashrate Rises
Bitcoin mining difficulty is currently at all-time highs, but miners seem unfazed as the hashrate has only continued to rise recently.
Bitcoin Mining Hashrate Continues Uptrend Despite Increased Difficulty
The “mining hashrate” is an indicator that measures the total amount of computing power currently connected to the Bitcoin network. Its value is measured in terahashes per second (TH/s).
When the metric value increases, it means that miners are bringing more machines online on the network at the moment. This trend shows that the current BTC blockchain is attractive for miners.
On the other hand, the falling value of the indicator suggests that some miners are disconnecting from the chain at the moment. This type of trend could mean that miners are not finding it as profitable to mine cryptocurrency these days.
Now, here is a graph that shows the trend in the 7-day average Bitcoin mining hashrate over the last year:
The value of the metric seems to have been sharply going up in recent days | Source: Blockchain.com
As shown in the chart above, the 7-day average Bitcoin mining hashrate rose and reached a new high some time ago, but in the last few days of February, the metric has seen a dip.
However, this drop was only temporary, as since the beginning of this month, the indicator has shown a strong upward trend and reached a new historical record. To understand why the metric might have behaved this way, it’s worth looking at the “mining difficulty” data.
Difficulty is a concept built into the BTC blockchain that decides how difficult miners currently find it to mine on-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 fast miners are mining blocks on the network. Whenever the hashrate changes, this rate naturally fluctuates as the computing power available to miners is also different.
To counter these fluctuations, the Bitcoin blockchain shifts the difficulty up or down (depending on whether miners are now faster or slower) just enough so that the block production rate returns to the 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, Bitcoin mining difficulty reached a new all-time high in the last network tweak after the hashrate also reached a new high. It is because of this difficulty increase that the hashrate has seen the aforementioned drop.
When miners find it harder to mine (due to increased difficulty), they earn less. Consequently, some small miners who were making low profits start to see a disconnect when the difficulty increases like this.
However, it is interesting how the hashrate decline was only temporary this time. Miners still continue to add more rigs to the network despite the difficulty of continuing to stay at these ATH levels.
This could be a sign that the biggest players in the mining space are probably still very optimistic about Bitcoin’s future and think it’s worth expanding their mining facilities now.
At the time of writing, Bitcoin is trading around $22,400, down 4% over the past week.
The asset has moved sideways since the plunge | Source: BTCUSD on TradingView
Featured Image by Brian Wangenheim at Unsplash.com, Charts by TradingView.com, Blockchain.com