Bitcoin’s (BTC) difficulty has reached a new all-time high as the price of the largest cryptocurrency surpassed $28,300 for the first time in many months. Miners will not face a difficulty that is 7.56% higher than the last period, which means that there is a larger number of ASIC miners getting connected to the Bitcoin network.
Bitcoin Mining Difficulty Surges
Bitcoin mining difficulty continues to grow as Bitcoin moves higher and as interest for the largest digital currency pushes its price higher. In recent weeks, we have seen Bitcoin move from $24,000 to over $28,000 as the current banking crisis deepens and as interest rates continue to grow in the United States and in the Eurozone.
The higher the price of Bitcoin, the more profitable mining machines become. This could be one of the reasons behind the recent increase in hash rate. According to BitInfoCharts, the Bitcoin hash rate has reached a new all-time high at 350 Ehash/s. This shows that there is a clear interest from miners in joining the network and protecting it with their mining power.
Nowadays, Bitcoin rewards are 6.25 BTC per block. That means that every single time that a block is found, there is a reward that is paid to the miner that found that block. These rewards decrease every four years 50%. There will be a new reduction in the rewards paid to miners as soon as next year. Therefore, this could be a good moment for miners to enter the market before rewards will move lower and they would earn fewer BTC every time they find a block.
With a higher price of Bitcoin, there is a larger incentive for miners to enter the market when difficulty is still not so high. In some cases, miners will be active until they are not profitable anymore due to the increase in difficulty. This adjustment is one of the most innovative things of Bitcoin that helps the network remain secure at all times, even if the price of BTC falls.
According to CoinGecko, Bitcoin surpassed $28,300 and it has a market capitalization of $548 billion. Furthermore, BTC has moved higher in recent weeks amid turmoil in the banking industry worldwide. The increase in the hash rate shows that there is a clear interest from miners to participate in the Bitcoin ecosystem and protect the network even further. There is a clear incentive to do so.
Banking Crisis: Does it Have an Effect on Bitcoin?
The banking crisis that we have seen in recent months could be having a positive effect on Bitcoin. Banks such as Silicon Valley Bank or Credit Suisse had to request governments and financial institutions to step in and help them stay afloat. With this in mind, many other banks could be experiencing a similar situation in the near future, something that could create a contagion effect all around the world, especially in the US and in Europe.
As banks continue to struggle, Bitcoin’s decentralized and trustless nature becomes more appealing to those seeking an alternative to traditional finance. In fact, some analysts have suggested that Bitcoin may serve as a hedge against inflation and a store of value in times of economic uncertainty. There will only be 21 million coins in existence, which is one of the reasons why Bitcoin moves higher so fast during times in which demand grows.
Furthermore, the recent increase in Bitcoin’s price has drawn more attention to the cryptocurrency, with mainstream media outlets reporting on its upward trajectory. This increased exposure may lead to more people considering Bitcoin as an investment option, further driving up demand and prices.
Additionally, there has been a larger interest from institutional investors to enter the market and get access to Bitcoin, and even other virtual currencies such as Ethereum (ETH) or Litecoin (LTC). As regulatory agencies try to enhance the legal environment in which companies should operate, institutions are trying to also better understand how Bitcoin or other virtual currencies could enhance their portfolios. Finally, and thanks to this growing interest from institutions, there have been new developments in the space that have been focused on making it easier for institutions to enter the market.