The result of today’s Federal Reserve minutes, Bitcoin miners’ robustness and increasing stablecoin demand in China could be signs that BTC has bottomed.
Someone ‘shit in the jacuzzi’ — Bitcoiners furious after testnet griefing
That “someone” — Bitcoiner Jameson Lopp — argues he was championing a much-needed fix to one of Bitcoin’s testnets.
Bitcoin Miners Brace For Impact As Difficulty Reaches Unprecedented Levels
The winds of change are blowing through the Bitcoin landscape. On March 14th, 2024, the network witnessed a monumental shift – mining difficulty skyrocketed to a record-breaking 84 trillion hashes. This unprecedented challenge coincides with another significant event on the horizon: the Bitcoin halving slated for April.
According to BTC.com, the rate has risen by nearly 5.80% since the previous modification. The mining hashrate for the original coin has also peaked, indicating that more people are now participating in the mining process. At present, the value stands at 617 EH/s.
Bitcoin Mining: The Difficulty Dilemma
Mining Bitcoin is no easy feat. Miners compete to solve complex cryptographic puzzles, and the difficulty of these puzzles adjusts based on the overall network hash rate. As more miners join the network, the difficulty increases to ensure a steady block production rate (roughly 1 block every 10 minutes).
This recent surge in difficulty signifies an influx of new miners, likely drawn by Bitcoin’s recent price rally that saw it peak at a staggering $73,800 on the same day.
The Halving Effect
The upcoming halving event in April throws another variable into the equation. Every four years, the block reward for miners – the amount of Bitcoin earned for successfully mining a block – is cut in half.
This economic policy is a cornerstone of Bitcoin’s design, aiming to control inflation and maintain scarcity over time. The last halving in May 2020 witnessed a significant price increase in the following months, and many analysts believe the upcoming halving will follow suit.
Here’s the logic: with the supply of new Bitcoins being halved, the existing ones become relatively more scarce, potentially driving the price up due to increased demand.
A Balancing Act For Miners
Despite the rising difficulty, the potential for Bitcoin’s price to appreciate after the halving could incentivize miners to weather the storm. This economic incentive is bolstered by the recent spike in mining rewards, which reached nearly $79 million
This suggests that even with the increased difficulty, miners are still reaping substantial profits due to the high Bitcoin price. However, the long-term sustainability of this model is debatable.
As difficulty continues to climb, the energy consumption required for mining will also rise. It raises concerns about the environmental impact of Bitcoin mining, especially considering the reliance on non-renewable energy sources in some regions.
Beyond The Headlines
The narrative surrounding Bitcoin’s recent surge often focuses on its price and the upcoming halving. However, there are crucial underlying factors to consider.
The ever-increasing mining difficulty raises questions about the long-term viability of proof-of-work, Bitcoin’s current consensus mechanism. Alternative, more energy-efficient mechanisms are being explored, but their widespread adoption remains uncertain.
Featured image from Unsplash, chart from TradingView
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It adds to a prior agreement in which Riot bought 33,280 miners from MicroBT. The term sheet was also updated, allowing Riot to buy another 265,000 miners in the future.
Bitcoin Ordinals haven’t wrestled blockspace from money TXs: Glassnode
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Machine efficiency and low cost of power are key to surviving the bitcoin halving.
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The blockchain industry is facing a massive power imbalance — just like the traditional finance industry.
Marathon Digital posts quarterly record of 2,195 Bitcoin mined in Q1
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Bitcoin Hashrate Hits 300 EH/s Mark as Industry Gets Some Breathing Room
It took only about a year for the bitcoin mining hashrate to gain the last 100 EH/s.
Why The Bitcoin Mining Hashrate May Not Be Out Of The Woods Just Yet
The bitcoin mining hashrate took a sharp nosedive as a historical storm tore through multiple US states. This saw power grids consolidate power to be able to provide enough energy for residents to heat their homes and some mining operations had to wind down to free up more of the electrical. There has been an increase in the hashrate since then but the worst may not be over yet.
Bitcoin Hashrate Takes A Beating
Electricity grids across the United States came under immense pressure as the country recorded one of its coldest winters yet. Temperatures dropped drastically across various states and the electricity grid was stretched thin to provide enough energy to heat homes. As a result, a number of bitcoin miners decided to pause their operations to free up some energy and this affected the hashrate contributed by the country.
By Christmas Day, the global hashrate had tanked almost 40%, dropping from its Dec. 24 peak of 276 exahashes per second (EH/s) to 175 EH/s. However, there was a 39% increase in hashrate on the same day which brought it back up to around 244 EH/s.
Since then, the hashrate has continued to wobble day to day and has now dropped back to the 212 EH/s level once more. This shows that while miners may have turned some of their machines back on, they may be shutting them down once more as the extremely cold weather persists.
How Long Will This Last?
Winter storm expert for Atmospheric Environmental Research Judah Cohen said that the Arctic blast currently being experienced in the United States should be short-lived and last about a week before temperatures begin to return to normal.
However, this still leaves a couple of days before it is expected to completely subside. This is evidenced by the zig-zag recovery and dips in the bitcoin hashrate in the last two days following Dec. 25. Miners who have taken their operations offline to help stabilize the electricity grid will likely leave them offline for a while longer until authorities are convinced the weather has stabilized. An example of this was back in July when Riot Blockchain had to shut off its mining machines in Texas as the state faced a heat wave.
Related Reading: Bearish Indicator: Bitcoin Volatility Hits All-Time Low
Given this, the bitcoin mining hashrate is expected to trend low for another couple of days before bouncing back up. As for the miners, given that Riot had received $9.5 million in energy credits for turning off operations in July, it is possible that some sort of recompense will be offered to the miners.
Ethereum Classic Hashrate Dumps Almost 50% In 3 Months, What About ETC?
Ethereum Classic saw its hashrate balloon when Ethereum finally moved to a proof of stake mechanism. The miners who were being kicked out of the network and could no longer use their machines had switched to others such as Ethereum Classic and Ravencoin to put their very specific machines to use. At the time, ETC’s hashrate had grown more than 200%, but now the network is seeing its hashrate fall once more.
Ethereum Classic Hashrate Down By Almost 50%
On Sep. 16, the mining hashrate of the Ethereum Classic network reached a new all-time high of 199.4 terahashes per second (TH/s) after climbing steadily for more than a week. With this growth had come more usage on the network, triggering staggering growth in its price.
However, as the Ethereum network has settled into its proof of stake (POS) consensus mechanism, the Ethereum Classic hashrate is correcting downwards. Hashrate is now down almost 50% in the last 3 months to be sitting at 109.3 TH/s on Dec. 22.
The decline can also be attributed to the bear market and the muted interest from investors. Since bitcoin’s price touched below $20,000, all of the cryptocurrencies in the space have seen a similar decline. Ravencoin, another proof of work network that got massive attention following Ethereum’s move to proof of stake, has also seen its hashrate plummet in the last 3 months.
Ravencoin’s hashrate now sits at 9.49 TH/s compared to its Sep. 22, 2022 peak of 17.59 TH/s. Meanwhile, other leading proof of work networks including Litecoin and Dogecoin has seen an increase in mining hashrate, whereas bitcoin remains mostly around 250 exahashes per second (EH/s).
What About ETC Price?
ETC, the native cryptocurrency of the Ethereum Classic network, was basically on a rollercoaster in the three months since Ethereum moved to proof of stake. At first, as the network began to get more attention, ETC’s price had risen drastically. It eventually peaked above $42 before starting another downtrend.
At current prices, the digital asset has lost over 68% of its value from September 2022 and is still very bearish. A lot of attention had also moved on to Dogecoin, a proof-of-work cryptocurrency that saw a surge in price following Elon Musk’s takeover of Twitter.
Obviously, this increase in the price of DOGE had incentivized miners to move over to Dogecoin, eventually taking share from Ethereum Classic. As interest fell, so did the mining hashrate and price naturally followed the same trend.
ETC now sits below its 100-day moving average, which means that investors are expecting lower prices to come. It is trading at $16.41 at the time of this writing, down 11% in the last 7 days.
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Old Bitcoin mining rigs risk ‘shutdown’ after BTC price slips under $24K
New generation Bitcoin mining machines would remain profitable even if the BTC price crashes by another 50%.
