Bitcoin (BTC) was unable to hold out last night and plummeted again. The panic in the market is great and the sentiment among crypto investors is downright bad. However, fundamentally things don’t look too bad for the largest cryptocurrency yet. For example, recently the hash-rate, or computing power, of the network has risen to new heights and the mining difficulty is on a all-time high.
Bitcoin fundamentals
The hash rate has recently increased to a new all time high. That means the computing power has never been as high as it is today. Actually, this is quite a positive signal, despite the current price of bitcoin. In the past, it was often thought that the price of bitcoin follows the hash rate, although this does not seem to be the case as the price plummets while the hash rate rises. High computing power also ensures stability and security of the network.
Because the hash rate is sky high, the mining difficulty rose to a new record. The Bitcoin blockchain adjusts the difficulty of it every 2,016 blocks mining process automatically. This is done to ensure that transactions are processed approximately every 10 minutes at all times. If the hash-rate of the network increases, the difficulty so scaled up and vice versa.
On January 21, the difficulty of the Bitcoin network increased by 9.32%, which is the highest increase since September 2021, and the harhrate of the entire network reached 197 EH/s,
— Wu Blockchain (@WuBlockchain) January 21, 2022
Cautious optimism?
The fact that both the hash rate and the mining difficulty are sky high at the moment can be seen as a very positive signal. It shows that bitcoin miners still have full confidence in bitcoin.
Increasing the difficulty actually causes miners to make less profit, after all it becomes more difficult to solve the math puzzles. Nevertheless, the gigantic computing power shows that miners are not deterred by this, on the contrary, miner activity is higher than ever before.
Miners are apparently still optimistic in the long run about their potential profits to be made from mining, despite the current state of the mining industry. bitcoin price.
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