Increasing Bitcoin Mining Difficulty Implies Miners’ Return, Jihan Wu Wary of Bullish Bitcoin Halving Narrative
The bitcoin network saw one of its biggest adjustments in mining difficulty on April 21. According to btc.com, the mining difficulty noted an 8.45% uptick from 14.72 T to 15.96 T.
The data suggest that mining difficulty is set to increase another 8.7% in 13 days. The difficulty that retargets every 2 weeks had risen by nearly 6% on April 8, after dropping by 16% on March 26 – the biggest fall since 2018.
Bitcoin mining difficulty rate is a metric that shows how hard it is for miners to solve bitcoin blocks to receive the bitcoin reward. If miners stop mining en masse, the difficulty will decrease; when more miners contribute to the network’s hash rate, the difficulty increases.
Increasing mining difficulty implies that miners have been coming back to the network in large numbers. The last two difficulty upturns, up a compounded 15%, seem to indicate that the competition is heating up again with bitcoin’s next halving 20 days away.
As bitcoin’s third halving event coincides with the rainy season in Sichuan where bitcoin miners are responsible for over 50% of the global hashrate starts, Jihan Wu, Bitmain founder and CEO, said in an online event that selling pressure will decrease and a rally might come as soon as the wet season/halving starts.
Veteran miners have already on the bandwagon, taking advantage of the big event in the crypto space. New costs and profits will come clear and stable days after the halving, during which, some miners will hold a wait-and-see attitude, regarding this, Wu estimated that bitcoin hashrate might fall by 20% after the halving. While figures of the previous two halvings show that mining difficulty and hashrate note major upticks after the event.
He also warns investors to not have high expectations on bitcoin price, “don’t expect a bull to come immediately or price to break record highs. Both believers and investors should take a long-term view of the industry and keep risks under control.”
Though the impact of the difficulty and hashrate adjustment has not been felt in the spot market, with bitcoin keeps fighting the $7k resistance, many traders believe that an increased mining difficulty and hashrate will have a positive impact on the price.