The bitcoin hashrate, which determines the bitcoin mining difficulty, is now at an all-time high than it ever was. Within one year, it is up by a factor of three.
It is estimated that in the last 4 days alone, the mining difficulty has risen by over 8% to now reach 15, 000, 000, 000, 000 ATH.
— CoinMetrics.io (@coinmetrics) January 15, 2020
Few of us understand just how significant bitcoin mining difficulty really. This is what it truly means.
The more computing power the bitcoin network has, the more quicker blocks get discovered, which further increases the difficulty adjustments every 2, 016 blocks or approximately, every 2 weeks. As this difficulty increases, competition likewise increases, and in turn, it gets increasingly difficult to earn mining rewards.
When all of this happens, as you can imagine, the more expensive bitcoin gets.
A slight decrease in mining from the Sichuan Province, Southwest China, could be responsible for the rise in hashrate. However, the impending halving is expected to push out a good number of network miners and decrease its hashrate.
Another force however is likely at play in the recent rising bitcoin prices.
Recent analysis by CoinMetrics, a reputable crypto analytical tool, shows another direct connection between Bitcoin and geopolitical events and how, under proper circumstances, the Bitcoin market efficiency increases and has the potential to be as efficient as the largest financial markets in the world, following the U-S.-Iran military tensions.
Taken together, the confluence of events and the increasing hashrate are likely behind the extremely strong reaction that Bitcoin is currently having.
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