On 27 June, the data published on the website of a Luxembourg based Bitcoin block explorer service, Blockchain, revealed that the level of difficulty of mining is at an all-time high. This seems to be an indication of the fact that Bitcoin mining is becoming competitive for block rewards.
This new record has surpassed the previous peak, which was in 2018. The new difficulty level, which is adjusted every 2016 blocks, has reached 7.86 million. The Hash rate itself has been reduced marginally to 56 quintillion hashes per second, although it had been previously increasing at a substantial pace.
Higher Competition along with a Bullish Drive
The metrics indicate not only higher competition among miners for new blocks, but also the overall bitcoin network security, which is at its highest point. This is a piece of excellent news for the investors, and therefore, the bullish drive in the Bitcoin market is not a very surprising phenomenon. This comes as a respite for the sector after a massive low in the last quarter of 2018.
Analysts, however, see inevitable downturns in the coming year and this can even be a precursor of that.
Reward Halving and Bitcoin Price
The Bitcoin block reward halving, which is scheduled for May 2020, can impact the sentiments of the miners. Moreover, this, in turn, can affect the competitiveness of the mining activity as well as the prices. In this respect, the report published by crypto hedge fund Pantera Capital can also be an indicator. According to the report, the rise in prices is merely a reach-back effect of the reward halving.
Given the history of reach-back effects of the previous halving events, the company predicted a bottom on 10 June 2019. The inflection points occurred on 376 and 320 days respectively before the halving events of 2012 and 2016. In this sense, while the metrics produced by Blockchain.com are enticing, they might fail to capture the entire story.