The Bitcoin network just fine-tuned a key parameter to coax back miners who quit after last week’s halving hammered their profits.
More than 20 exahashes per second (EH/s) of computing power – the equivalent of around 1.5 million older-generation mining machines – has been switched off from Bitcoin since the network’s halving.
The 7-day rolling average of Bitcoin’s hash rate has dropped over 20% from around 122 EH/s just prior to the halving on May 11 to now 97 EH/s. The once-in-four-years event reduced miners’ block rewards from 12.5 to 6.25 bitcoin (BTC) per block.
The hash rate drop after the halving has significantly outrun the hashing sprint prior to it. As such, Bitcoin’s mining difficulty, which measures how hard it is to compete for block rewards, decreased 6% to 15.14 Trillion at 2:00 UTC on Wednesday in the network’s first biweekly difficulty adjustment since the halving.
The amount of computing power connected to Bitcoin has been on a roller-coaster ride over the past two weeks.
Bitcoin’s mining difficulty adjusts itself every 2,016 blocks, roughly 14 days, to ensure the average interval between blocks remains at 10 minutes. If a large number of miners are switched off from the network, resulting in a longer-than-10-minute average block interval, the difficulty will decrease to encourage participation.
And Bitcoin’s third halving on May 11 happened exactly at the halfway mark of the previous 2,016-block difficulty cycle.
We believe that, as the halving drew closer, miners in China did a sprint run of mining, even with older generation machines, to make most of the last days of the higher block rewards
That’s why we saw those sky-high hash rate figures,” he said. But as the halving kicked in midway, he said, miners that were marginally profitable had to switch off.
I’m really curious to see how this lower hash rate is going to affect the mining population and maybe this lower hash rate will be just enough to get those miners back into the profitability range. Now we know that 1.5 million mining rigs were shut off after the halving.
While bitcoin (BTC) is often discussed as the cryptocurrency best suited for turbulent times, the price of ether (ETH), the second-largest digital asset by market capitalization, has been substantially outperforming bitcoin since the start of 2020. But ether has much different technical dynamics to consider than bitcoin.
As of 20:00 UTC (4 p.m. ET), ether was trading at $211, a loss of less than a percent over the past 24 hours. The native cryptocurrency of the Ethereum network was close to its 10-day moving averages, a technical indicator signaling sideways trading, with little price movement. Ether dropped as low as $209 earlier in the day on exchanges, then hit $215 at 11:00 UTC (7 a.m. ET).
Amid the recent hype about the halving, a once-in-four-years event that reduced the supply of bitcoin and the proclamations of investors like Paul Tudor Jones II that bitcoin is a good investment in an extraordinary economic era, ether’s price has outperformed it. For the year to date, ether is up a whopping 65% while bitcoin has risen 35% for the same period.
A much smaller market capitalization for ether likely helps ignite larger price movements versus bitcoin
“Ether has long been tracking bitcoin’s price action, albeit with higher beta. This means that when bitcoin surges in value, ether’s value usually increases as well by an even greater percentage
Like I mentioned in yesterday’s video. If you think about the fact that Bitcoins price at its maximum was $20,000 and ethers price was $1,400 at the current prices of $200 for ether and $10,000 for Bitcoin. If they were to reach back to that level, Bitcoin would only be double whereas Etherium would be 7 times higher even though it’s following the same movement. The percentage is substantially different.
Bitcoin has witnessed triple-digit percentage gains over the past two months. Yet, one metric has turned quite bullish after the recent
halving event, showing signs the cryptocurrency remains undervalued and still has room to run.
The largest cryptocurrency by market capitalization is trading near $9,700 at press time, up 150% from its March 12 low of $3,867.
And while that may cause some investors to think the cryptocurrency is overbought or overvalued, an on-chain metric called the “Puell Multiple”, which marked a price bottom in March, is suggesting otherwise.
The Puell Multiple is calculated by dividing the daily issuance value of bitcoins in U.S. dollar terms by the 365-day moving average of the daily issuance value. It is currently just below 0.5, according to the data provided by the blockchain intelligence firm Glassnode.
A reading below 0.5 indicates the value of the newly issued coins on a daily basis is quite low compared to historical standards. Historical data shows bear markets tend to end with the Puell Multiple’s drop below 0.50.
The Puell Multiple is usually influenced by gyrations in price. For instance, if prices drop the dollar value of the daily issuance declines, pushing the ratio lower.
Daily issuance refers to the number of coins added to the ecosystem by miners, who receive them as rewards for mining blocks on the cryptocurrency’s blockchain. Miners mainly operate on cash and cover the cost of mining by offloading their holdings by selling into the market.
However, reduced supply from miners can also weigh on the Puell Multiple. That seems to be the reason behind the ratio’s recent downward move.
I always think it’s strange when people use these technical indicators to predict the price of such a volatile asset. I’m curious to see if they are correct because if they’re anticipating a nice Bull Run in the near future, maybe we could see that $20,000 mark.
If we do, we will see a lot of resistance levels like 11,000 and 12,000, which are big resistance levels in Bitcoin. I think in the meantime while this whole storm goes on I might be switching my assets over to Ethereum.
Bitcoin Mining Difficulty Drops by 6% In First Adjustment After Halving
Here’s Why Ether’s Price Has Jumped 65% So Far This Year
This Metric Shows Bitcoin Is Undervalued Even After 150% Price Rally
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