Photo: Steven Millstein / Flickr
While the interest in mining Bitcoin witnesses a huge decline, it has negatively impacted interest in mining BCH and Bitcoin SV.
Interestingly, miners are not shifting platforms but rather bidding farewell to crypto mining altogether. However, this should not create any disruption in the functioning of Bitcoin ( in short term) as the dynamic difficulty adjustment system will ensure optimum hash power for the network.
Just for a reminder, at least 100,000 individual miners have shut down, according to Autonomous Research LLP. Fundstrat Global Advisors LLC estimates that about 1.4 million servers have been unplugged since early September.
The average hash rate, or computing power, of the Bitcoin network, that was decreasing for more than a month, started to pick up on December 14, or even before the price jump on Monday. Moreover, yesterday, the Bitcoin mining difficulty dropped less than estimated, or by 9.56%. BTC.com, a major mining pool, forecasted a 16% drop. However, now, the pool estimates that the difficulty will drop by another 8.22% in almost 13 days.
As Bitcoin can be seen recovering to above $4000, the difficulty in mining may not create any disruption in its functioning at least for a short term. Also, the dynamic difficulty adjustment system will make sure about the optimum hash power for the network.
What poses as a real threat is that such a market condition will likely be detrimental to the mass adoption of Bitcoin in the long run. In case, the miners continue to bid farewell in droves, it can theoretically put a big question mark on the security of the cryptocurrencies.
Why the Price is Rising?
There are two possibilities people are pointing to that might be helping drive the positive sentiment,” suggests eToro senior analyst Mati Greenspan.
“Number one is a report from Bloomberg, who have done the research and found that Tether does indeed have the reserves promised.
The second is an update from ICE, who seems to be all set for their physical Bitcoin futures launch of January 24 (pending regulatory approval). The update is from a week ago, but the timing and dates in the note seem to line up with the market movements quite nicely.”
Others point at the stark rise of Bitcoin Cash this week. It’s ascended by a stunning 117% against fiat in the last 7 days, almost 80% against Bitcoin and almost 70% against Ethereum. Following this monumental rise, it’s now only 95% down from its all time high. Its atypical movements relative to the rest of the markets suggest that the previous drop might indeed have been the result of the Bitcoin Cash hash war, suggests Donald Bullers of Elastos.
He said:
“Experts have claimed that the BCH fork caused the crash this fall — while Bitcoin SV has held steady, BCH’s significant recovery is likely attributed to the Bitcoin’s regain this week.”
It’s worth noting that the view that the BCH fork caused the crash isn’t universally accepted.
We already wrote of how despite BCH’s post-fork price collapse, it is still the most profitable of the three major Bitcoin iterations, at least for miners. BCH is 9.2 percent more profitable than BTC, even after its recent difficulty reduction, making it around 47 percent more lucrative for miners than BSV.
The miners will still face the same problems that were present before, mainly their inability to achieve internal economies of scale. If the smaller miners don’t return, then the remaining players have an opportunity to consolidate their positions in the BTC mining sphere.
Bitcoin price extended gains and broke the $4,000 and $4,050 resistances against the US Dollar. Yesterday’s key bullish trend line is in place with support at $3,850 on the hourly chart of the BTC/USD pair.
The price is currently consolidating gains above $4,060 and it may continue to rise in the near term.
