A few months ago, many thought that Bitcoin was on the sidelines. The cryptocurrency saw a 50 percent decline in March within a single 24-hour period, which was associated with the collapse of global markets.
The BTC miners followed this example and shut down their machines en masse because they were no longer profitable. But just three and a half months later, network data shows that Bitcoin is fundamentally stronger than ever.
The difficulty in bitcoin mining is at a new high point
As previously reported, the hash rate of the Bitcoin network is rising sharply despite the sluggish market. Crypto data company TradeBlock reported on July 7 that the seven-day moving average reached an all-time high of over 124 exahashes per second. That's twice the hash rate a year ago and 1,000% higher than the hash rate at Bitcoin's $ 20,000 high.
The difficulty of Bitcoin, which regulates how quickly blocks are mined, should follow Bitcoin's example. The pseudonymous quantitative analyst “PlanB” said on the subject:
“DESPITE THE DEATH SPIRAL FUD, THE SURRENDER OF THE MINER FUD, THE FUTURE MANIPULATION FUD, THE CORONA, THE PLUSTOKEN FUD, THE TETHER FUD, THE WHALES THAT SELL THE FUD, ETC ... BTC HAS JUST HAD ITS THIRD-BEST QUARTERLY CLOSING OF ALL TIME ($ 9.1K) AND IS HEADING TO DIFFICULTY ON MONDAY ATH (17E12) ”.
Vancouver-based company HIVE Blockchain Technologies announced on July 6 that it had bought 200 of Bitmain's latest miners. The company plans to activate these devices sometime in the next three weeks.
Core Scientific, a U.S.-based blockchain and artificial intelligence hosting provider, has invested even more. Perforbes acquired 17,595 new Bitmain Antminer S19s, which is said to be the largest delivery of such machines to the United States to date.
The Bitcoin mining ecosystem also benefits from the rainy season in China in the summer. Since crypto mining is centralized in China, especially in river regions where hydropower is predominant, the rainy season leads to cheaper electricity.
How will that affect the price?
A digital asset manager's analysis suggests that Bitcoin miner's health is somewhat correlated with BTC's price behavior. In December, investor Charles Edwards unveiled a model that suggests that BTC's price has long been affected by the power consumption of the underlying network.
His latest analysis of the data suggests that Bitcoin is trading about 25% below its energy value, which is now at $ 12,800. As miners continue to activate new machines and farms, Edwards' analysis assumes Bitcoin will recover to $ 12,800 and possibly beyond.