The latest edition of the weekly report from crypto exchange Bitfinex has revealed that Bitcoin’s mining difficulty reached a new peak as BTC hovered around the $26,000 price level.
The “Bitfinex Alpha” report disclosed that the mining difficulty hit an all-time high of 55.62 trillion hashes.
Bitcoin’s Mining Difficulty Hits New High
The mining difficulty is a metric representing the challenge of validating a new block. High difficulty is considered a positive indicator because it means the Bitcoin network will use more computing power to mine the same number of blocks, making the blockchain more secure against attacks.
The Bitcoin protocol automatically adjusts its mining difficulty every two weeks – after 2,016 blocks – to ensure a consistent block generation time of approximately 10 minutes. Bitfinex’s analysts believe the heightened mining difficulty is due to an influx of Bitcoin miners, attracted by the network’s block rewards of 6.5 BTC and transaction fees. The surge also highlights Bitcoin’s increasing computational power.
“Bitcoin difficulty increasing can suggest that miners believe that the current price demonstrates that the current BTC price suggests a downward deviation from the true value. Miners could be confident that the price will eventually rebound as this can be seen as a mere downward deviation from its actual value,” Bitfinex said.
Besides the increasing mining difficulty, Bitcoin’s hash rate has also hit a new peak of approximately 414 terrahashes per second (TH/s), marking a 60% surge since the start of the year. The metric measures Bitcoin’s computing power and is a testament to the network’s resistance to attack.
Market Participants Brace for Future Volatility
Since BTC’s sudden plunge on August 17 to the $25,000 level, over $2 billion of futures positions have been closed, yet the market has not seen a major movement of coins. Bitfinex found that long-term holders have continued accumulating, but Bitcoin’s supply metrics still signal inactivity.
In addition, Bitcoin’s volatility metrics are still low by historical standards, indicating that the market could take longer to recover. As CryptoPotato reported last week, the implied volatility metric is still higher than historical volatility, showing that market participants expect more volatility in the future.