Key Points
- Bitcoin’s mining difficulty has increased significantly, impacting its perceived value and scarcity.
- Miners are cashing out their Bitcoin holdings, potentially indicating a price drop.
Bitcoin Mining Difficulty and Hash Rate Increase
According to on-chain data from Glassnode, the mining difficulty of Bitcoin (BTC) has seen a significant increase from its previous lows on 22 May. The mining difficulty of Bitcoin is a measure of how challenging it is to find the correct hash for each block.
An increase in mining difficulty suggests a rise in hash power, which could slow down the block-solving process and increase block time to as much as 10 minutes. This could potentially affect the perceived value and scarcity of Bitcoin, but not necessarily its actual value.
Impact on Miners’ Revenue and Bitcoin’s Price
Along with the rise in mining difficulty, Bitcoin’s hash rate also increased. A high hash rate indicates a secure and healthy network, which can reassure investors that buying Bitcoin could be profitable in the long run.
However, a significant decrease in the hash rate can suggest risks or changes to the network, making it harder for miners to profit from their operations. As a result of the increased mining difficulty and hash rate, miners’ revenue has seen an increase.
Miners’ revenue, according to on-chain data, was 558.057 BTC at the time of writing, suggesting that more new transactions are being confirmed on the block than on 21 May.
However, data also shows that miners are selling their Bitcoin holdings, indicating that Bitcoin mining could become more challenging and potentially leading to a price drop for the cryptocurrency.
Bitcoin’s price at the time of writing was $68,291, having increased by less than 1% in 24 hours. The price movement is worth monitoring as Bitcoin holders may seek other opportunities to cash out.
The number of active addresses on Bitcoin’s network, which measures the daily interaction of users on a blockchain, has also increased significantly. This could potentially lead to a price increase for Bitcoin, although other factors must also be considered.
However, the one-day circulation has decreased to 33,000, indicating a decrease in the number of coins engaged in transactions. Considering these factors, the price of Bitcoin could potentially increase in the mid-term, with the value possibly rebounding towards $73,000.
