By Shelly Melancon (Switzerland)
Bitcoin mining difficulty has fallen by 28% giving rise to speculations about a long ride before the anticipated bullish trend happens. This is an aftermath of the exodus of Chinese Bitcoin miners from the country following the crackdown by Chinese regulatory authorities on mining operations. Last month, there was a drop in the asset’s mining difficulty shortly after the ban in China. However, as miners migrate to other regions where their mining activities are supported, Bitcoin mining difficulty has experienced its biggest drop yet on Saturday.
While Chinese miners prepare to resume their activities, a handful of crypto analysts are wondering what the future bodes for the price of Bitcoin. The poser is will the drop in mining difficulty result in a price recovery for Bitcoin? A prediction indicated an imminent dip in October.
More Competition Expected As Chinese Miners Look to Resume Operations
Following the difficulty dip, there could be an
increase in the hash rate as other miners with low hash efficiency look to fill up the gap left by Chinese miners. Although this could lead to an increase in difficulty, but not up to the heights recorded when Chinese miners were still active. Chinese miners will return to their operations in a few months from now. By then, mining difficulty could go higher as more competition will ensue for mining rewards.
Also read:Experts Observe Relationship Between Hash Rate and Price
Meanwhile, analysts have noted a relationship between price and hash rate as it is a notion held by Bitcoin proponents. The notion holds that increase in hash rate leads to an uptrend and vice versa. This precedent has been set in the past according to the charts- in 2013 and 2017, there were price uptrends.
However, this year may be different as prevailing speculations are that the price of Bitcoin is yet to retrace to the actual bottom before an uptrend will occur. Analysts at JPMorgan Chase and Co. have speculated a crash to $25k. The recent bottom the top crypto asset was $28k.
While miners migrate to regions like Kazakhstan, Texas, Iran to continue their activities, BTC’s price will be stopped from experiencing the corrections it has undergone in the past two months since May. Bitcoin mining may also increase while efforts are being made to find a sustainable source of energy for mining. Some have suggested hydroelectric sources while El Salvador is looking to convert volcano wells to good use. The Bitcoin Mining Council, a body set up in May to address mining concerns and proffer solutions had highlighted sustainability as its focus.
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