Bitcoin mining difficulty increases to a new all-time high

on Jul 14, 2020
  • Bitcoin mining difficulty and hash rate have skyrocketed recently, leading to a new high.
  • This is taken as a positive signal, as the return of the miners is usually a bullish sign.
  • It is likely that miners expect the growth of BTC price, or more favorable mining conditions.

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While Bitcoin price remains rather unimpressive, still sitting in a lower $9k region, this does not mean that there is no action regarding the coin. In fact, Bitcoin has just reached a massive new milestone behind the curtains, and it has to do with its mining difficulty.

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Bitcoin mining difficulty reaches a new high

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Bitcoin’s mining difficulty has been growing for some time, which led to a new high reached earlier today. The difficulty hit a new record, exceeding 17.3 trillion, which represents a 9.89% increase from its past level.

The growth of the coin’s hash rate and mining difficulty means that there is interest in the mining sector, which is typically seen as a positive development. Naturally, investors welcome any bullish signal, and so do traders, particularly due to recent concerns caused by Bitcoin halving that took place on May 11th.

The hash rate and mining difficulty are often in correlation, so the accompanying growth doesn’t really come as a surprise. After all, when the difficulty goes up, it means that more miners are attempting to solve blocks and receive rewards.

More miners mean that the number of Bitcoin network participants is larger, thus the network becomes safer, which is yet another positive byproduct of miners’ interest.

What does this mean?

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Now, since miners are coming back, this indicates that they expect BTC price to go up. This is the only scenario where mining BTC is worth it.

As many likely know, BTC halving in May reduced the block rewards from 12.5 BTC per block to 6.25 BTC per block. This means that each miner would receive a lower amount for their participation, which will not be a problem if BTC price surges. If the price drops or remains the same, mining simply wouldn’t be profitable for most participants.

Another possibility is that mining conditions are more favourable now. One scenario in which this might be the case is the arrival of the rainy season in China, where 85% of mining takes place. The rain season means greater electricity production, which also means lower prices of power, which Bitcoin mining demands a lot of.

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