The indicator has increased for the second time since the end of July. In total, it has grown by 13% over the past two weeks. How long will it take to recover the hashrate of the main cryptocurrency and can it support the coin rate?
During the last recalculation, the difficulty of Bitcoin mining increased by 7%, to 15.56 trillion hashes (T). The indicator continues to recover after falling to a 1.5-year low of 13.67 T in mid-July. However, the value remains far from the peak of 25.05 T, set in May this year.
The first increase in mining difficulty after the fall in May occurred on July 31st. The indicator increased by 6% as a result of recalculation (up to 14.5 trillion hashes).
The topplabs.org experts explained why the Bitcoin hash rate is restored and how long this process will take.
Industry recovery
The growing complexity of bitcoin mining speaks of a gradual recovery of the industry after the events in China, where a ban on the mining of cryptocurrencies was introduced, explained Roman Nekrasov, co-founder of the ENCRY Foundation. According to him, the hashrate and mining difficulties of the main cryptocurrency are growing due to the relocation of Chinese miners, as well as industry representatives from other countries, who decided to take advantage of the situation and increase production volumes.
“Both phenomena took place. Chinese entrepreneurs hardly managed to relocate all mining facilities in such a short time. This was within the power of medium and large entrepreneurs, and small mining farms most likely simply stopped working, "Nekrasov explained.
American miners are strengthening their presence amid a decrease in hashrate, said Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. He argues that Chinese mining companies took time to relocate to other jurisdictions, diversify their businesses and set up equipment, which is not a quick process.
According to Nekrasov's forecast, the hashrate of the bitcoin network will recover to May indicators by the end of this year. Already in October or November, the hashrate will reach the level at which it was before the ban on mining in China was introduced, the co-founder of the ENCRY Foundation believes.
Correlation with the market
The ban on mining in China, a decrease in the hash rate and the complexity of bitcoin mining had a negative impact on the price of the cryptocurrency, which dropped to $ 28.8 thousand in June, recalled Vladimir Smetanin, CEO of the cryptanalytic company Newcent. According to him, over the past week alone, bitcoin has grown by 14%, but this does not guarantee a long-term reversal.
“There is no stable trend yet, volatility will persist. In addition, in recent weeks, miners have continued to store more generated bitcoins instead of spending them, ”added Smetanin.
The current recovery of the hash rate may occur in parallel with the recovery of the crypto market, but this is more a coincidence, not a correlation, the financial analyst of the Currency.com crypto exchange is sure. In his opinion, the recovery of the crypto market should be associated with the fact that market participants have nothing to fear.
“Chinese miners have left China and are gradually returning to work, there is no one else to have a nightmare in the PRC,” explained Karkhalev.
The restoration of the hash rate and the increase in the complexity of mining has a supporting effect on the bitcoin rate, but this factor should not be considered as the dominant one, Nekrasov emphasized. He believes that the basis for the further growth of bitcoin remains the continued interest in cryptocurrencies from large technological and financial players and the emergence of institutional investors in the crypto industry.