Pre-Bitcoin Halving Race Pushes Mining Difficulty to Record High
As Bitcoin (BTC) mining difficulty and hashrate are reaching new all-time highs, the Cryptoverse is discussing the meaning behind it, and it seems unlikely that the miners are capitulating ahead of the Bitcoin mining reward halving in May.
As reported by Cryptonews.com in October 2019, miners will try to increase their mining activity, so as to obtain a greater share of the hashrate ahead of the halving. And it seems that Bitcoin miners are expanding according to this scenario.
Bitcoin mining difficulty, which is a measure of how hard it is to compete for mining rewards, is expected to hit yet another record in a matter of hours. The network difficulty currently stands at 14.99T, which is already the highest it’s ever been. Major Bitcoin mining pool BTC.com estimates that during the next difficulty adjustment, expected to happen later today, it will increase by 8.64%, reaching another all-time high with 15T, and making validating new blocks even harder.
The last difficulty adjustment two weeks ago brought a change of over 6.5%, which is not an uncommon number to see. As a matter of fact, the difficulty dropped only seven times in 2019, usually by a small percentage, except in November when it dropped 7.10%. The difficulty, therefore, usually rises, and we’ve seen it go up by as high as 14%.
BTC price also dropped this past November at the time difficulty did. Furthermore, compared to the time of crypto winter and BTC dropping to the USD 3,000 level in December 2018, the difficulty we are likely to see after the next adjustment will be three times higher than that.
Meanwhile, hashrate, or the computational power of the Bitcoin network, has also been rising. As a reminder, this is relevant as higher hashrate suggests more secure network, with more miners competing for the block reward, commonly leading to higher mining difficulty. It has also hit an all-time high, and the average hashrate currently is 98.67 EH/s. For comparison, at the beginning of 2019 it was 42.10 EH/s, while in December 2018, it went as low as 36.55 EH/s.
It has been consistently increasing throughout the last year, and it corresponds with the rise in BTC price. In January 2019, the price was c. USD 3,500, while we’ve seen it go over USD 10,000 several times this year, approaching USD 14,000. At pixel time (9:20 UTC), BTC trades at c. USD 8,522. It went up almost 5% in the past 24 hours, 8% in the past week, 19% in a month, and 138% in a year.
Bitcoin mining difficulty (the red line) and bitcoin price chart (30 day average):
There has been a lot of talks about miners potentially closing shop with the halving approaching, the difficulty increasing, the block reward declining, and the cost for generating blocks rising. The market speculated in late November that miners could capitulate, but we haven’t seen a sign of that yet, and the numbers do not seem to indicate it happening (yet).
“For the most profitable miners, I could certainly see them taking their excess profit and holding bitcoin if they expected the price to continue rising,” Medio Demarco, the Principal at Delphi Digital, a cryptocurrency research company, previously told Cryptonew.com. “Less profitable miners will probably be forced to either upgrade their operations to be more competitive or walk away (this is always the case though).”
The halving anticipation itself could perhaps influence these recent increases, as well as the rise in price of the world’s most popular coin, however, there are numerous ongoing debates about whether the halving is already priced in, or if the rising price could be a self-fulfilling prophecy.
That said, the Cryptoverse seems to be excited for this approaching difficulty adjustment, with popular anonymous investor and Twitter user PlanB, calling it “epic.”
People were also discussing the effect of new mining equipment coming in, which is generally speaking better suited for the job and may handle the rise in difficulty better. (Learn more: Top 5 Bitcoin Mining Machines Ahead Of Halving)
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