Bitcoin Network Difficulty Reaches New High in More than Three Months, Will BTC Price Follow?
Bitcoin (BTC) network difficulty has reached a new high in more than three months after increasing 5.11% since March 10, 2019. The network has rate has currently reached 45 million TH/s. Could the increase in difficulty be related to a price increase in the near future?
Could Bitcoin Start Growing?
There have been several comments regarding Bitcoin price being correlated to network difficulty. Clearly, there is no linear trend among these two tendencies but there might be some relationship. If Bitcoin’s price grows, hash rate increases (more miners enter the space), and difficulty follows the trend. If Bitcoin price drops, some miners may leave the market, ending up in a hash rate drop. Consequently, the difficulty will adjust and allow the network to have more miners.
In November 2018, Bitcoin price dropped under $6,000 and reached the lowest point in more than a year in December. It is possible to see that the hash rate in the network followed this trend. From August until the first days of December, Bitcoin’s hash rate dropped 50%. Since that moment, the hash rate increased by almost 47%.
During the same period of time, the price of Bitcoin did not grow 47%. Indeed, the digital currency grew 25% in this time period. The difficulty has also followed Bitcoin’s price. Indeed, the difficulty in the network grew almost 25% since the massive drop in December.
In the future, the hash rate could continue to increase. Bitmain, the largest ASIC miner producer in the world could deploy over 200,000 Antminer S11, S15 and T15 units in order to mine virtual currencies. The company registered large losses in 2018 and the intention is to recover some funds and continue its expansion.
Bitcoin is currently being traded around $4,050 after dropping for a very short period of time under $4,000. Bitcoin has a market capitalization of $70 billion. The most efficient miners could be working for profits, but with this difficulty increase, there might be some miners that are not profitable anymore. If Bitcoin price continues growing, the difficulty in the Bitcoin network could increase as well.