While the price of Bitcoin (BTC) is dropping, the mining difficulty and hash rate went up. This has led some market observers to believe that we may not see a mass miner capitulation yet. (Updated at 15:09 UTC: updates in bold).
When the price drops and mining revenues decrease, miners who struggle to earn profits are forced to shut their least profitable gear off. However, Bitcoin mining difficulty, increased yesterday by 1.99%, despite major Bitcoin mining pool BTC.com estimated that it might drop by another 5% after a 7.1% drop on November 8. Now, another increase by 1.14% is expected in two weeks, though these estimations are less likely to be accurate the further they are from the event. And while the hash rate, or the computing power of the Bitcoin network, increased c. 5% since November 8, the price dropped by c. 20% in the same period of time – all BTC’s monthly gains have been completely erased, turning back the clock to the pre-rally numbers. However, the hash rate is considered to be a lagging indicator.
Bitcoin’s hash rate chart
(7 day average)
Bitcoin price chart:
“I think difficulty adjustment itself is a good sign, that means more calculating power involve in the BTC’s ecosystem. Indeed, it will bother Bitcoin miners that Bitcoin’s return cannot reflect its value, and it forced miners to quickly upgrade their hardware, which will be even harder for individual miners, more institutional investors will join the game. This is a game changer, will affect the mining industry,” Steve Tsou, CEO of RRMine, a Hong Kong-headquartered global Bitcoin hashrate asset management and trading platform, told Cryptonews.com, adding that “there definitely will be a unicorn level of hashrate institutional provider” and that “RRMine is aiming for that position.”
“What could be happening, and this is just a theory, is that some miners have begun to sell off some of their stash. During a…