Bitcoin mining difficulty has risen sharply, or the price of coins has picked up

The dynamic adjustment mechanism of Bitcoin mining difficulty is the key to the success of this consensus mechanism. Yesterday, the Bitcoin mining difficulty was raised by one-time to nearly 16.7% to 16.55T. According to btc.com data, the current Bitcoin network computing power 121.95EH / s, 12 days before the next difficulty adjustment. It is expected that the difficulty of mining will rise again by over 7% to 17.75T in the next difficulty adjustment, which will further refresh the historical high level.

Bitcoin's mining difficulty will generally be adjusted every two weeks or every 2016 blocks. The mining difficulty will increase simultaneously as miners flood the market, which will make it more difficult to obtain new block rewards. If the miners stop mining, the mining difficulty will decrease and the market will be in a relatively dynamic equilibrium situation.

Bitcoin's PoW hash rate is the computing power required to modify or attack this network. The rising hash rate means that more and more miners are participating in this market, which also means the Bitcoin network The security has been improved synchronously. To attack the Bitcoin network, the attacker must provide more computing power than the sum of all the computers currently mining Bitcoin. As the hash rate increases, the likelihood of Bitcoin facing such an attack is almost zero. Generally speaking, the rise of the hash rate is often a precursor to the rise of the currency price.

Market analyst @BitcoinPrinter tweeted a few days ago that the green line in the picture below shows that the price of bitcoin closed up in the period before the next difficulty adjustment after the difficulty increase of 5% or higher since 2015. The line is a situation where the price of bitcoin drops in the next period under the same standard. As can be seen from the figure, although the increase in the difficulty of mining does not mean that the price of bitcoin will necessarily rise, it is clear that the rise in the price of currency for a period of time after the difficulty of mining has increased significantly is an absolute high probability result.

There have been analyses that halving Bitcoin rewards will cause miners to leave the market, because a decline in mining rewards will lead to unprofitable mining and trigger a death spiral with a decline in hash rate. However, the probability of this happening is very low, because in this very competitive industry, compared to the extreme situation of the death spiral, the rewards are more likely to happen after the reward is halved. Merchants were annexed by big miners.

From the perspective of the supply and demand of the market, the halving of rewards is relatively easy to understand that the supply has declined when market demand has increased steadily, and this change is expected to drive prices up. And those miners who are able to stabilize output after the halving occurs will have a more substantial profit after this adjustment.