- With the rebound in Bitcoin in July, the odds of more miners returning is a positive sign that a key sector in the cryptocurrency industry is venturing that a bottom may already have been priced in.
- An increase in difficulty suggests a growing number of Bitcoin miners are willing to secure the Bitcoin blockchain at current prices, indicative of a tentative bottoming.
While it’s been said that markets have bottomed when the last bull becomes a bear, another key metric eyed closely by cryptocurrency investors is Bitcoin mining difficulty.
And with the first Bitcoin difficulty increase since June set to occur this month, miners who had otherwise been sitting out the recent carnage in the markets look set to toss their hats back in the ring once again.
Bitcoin miners from Texas to Tajikistan have turned off their rigs as energy prices soared thanks to inflation and the Russian invasion of Ukraine, as well as heat waves which have increased demand for energy to cool homes and offices.
Older mining rigs and inefficient, overleveraged miners have shut down, some permanently, decreasing hash rate and bringing down the difficulty for mining Bitcoin.
But with the rebound in Bitcoin in July, the odds of more miners returning is a positive sign that a key sector in the cryptocurrency industry is venturing that a bottom may already have been priced in.
More analysts are predicting that as long as there are no fresh lows for Bitcoin, the slowdown in mining activity ought to end either this month or next with some onchain signals already noticeable.
Bitcoin mining difficulty looks set to increase within the next two days, after three straight consecutive difficulty downgrades.
Mining difficulty increases when more people mine Bitcoin and decreases when less people put computing power towards securing the Bitcoin blockchain.
An increase in difficulty suggests a growing number of Bitcoin miners are willing to secure the Bitcoin blockchain at current prices, indicative of a tentative bottoming.
