- The increase in difficulties has led to an increase in the daily income of miners
- Many miners have cashed out their BTC, suggesting the coin’s price could fall
According to on-chain data from Glassnode, Bitcoin (BTC) mining difficulties have reached a significant peak from their May 22 lows. Bitcoin mining difficulty measures how difficult and time-consuming it is to find the correct hash for each block.
Mining difficulty does not always affect the value of BTC. However, this impacts its perceived value and rarity. An increase in difficulty implies an increase in hashing power. In turn, blocks might not be resolved faster and the block time could reach 10 minutes.
In terms of price, an increase in this metric could be bullish. Indeed, miners could be encouraged to validate more transactions on the network.
Source: Glassnode
However, mining difficulty isn’t the only metric skyrocketing on the network. In fact, another metric that followed suit was Bitcoin’s hash rate.
The higher the difficulty, the higher the income.
If Bitcoin’s hash rate is high, it indicates that the network is secure and healthy. For investors, this increase provides assurance that purchasing BTC could be profitable in the long term. However, this condition only works if market conditions are in a bullish phase.
On the other hand, a significant drop in hash rate indicates changes or risks to the network. In such situations, miners might find it difficult to generate profits from their operations.
Source: Glassnode
As expected, the impact of increasing mining difficulty and hash rate was reflected in miner revenues. In fact, at the time of writing, on-chain data revealed that miners’ earnings stood at 558,057 BTC.
This appears to indicate that operators have been working to confirm more new transactions on the block, compared to May 21.
Not everyone is HODLing
AMBCrypto also looked at the miner’s change in net position. At press time, the metric showed a reading of -2,748.69 BTC. Miner Net Position Change tracks the 30-day evolution of the Bitcoin supply held in miner addresses.
When this metric is positive, it means that miners are accumulating more coins. However, the recent decline seen over the past two weeks means miners are cashing out their holdings.
As such, it is possible that Bitcoin mining will become more difficult. For price action, this could lead to further decline in the cryptocurrency.
At press time, BTC was valued at $68,291, having appreciated by less than 1% in 24 hours following numerous sideways movements. The price action is worth monitoring as Bitcoin holders may look for other opportunities to cash out in the future.
BTC in circulation drops
From an on-chain perspective, AMBCrypto also looked at 24-hour active addresses. According to Santiment, 24-hour active addresses on the Bitcoin network were 747,000.
This hinted at a significant rise from the May 23 value. Active addresses measure daily user interaction on a blockchain, meaning the number of Bitcoin transactions has since increased.
For the price, the increase in activity could boost the price appreciation of the coin. However, this metric alone cannot determine BTC’s next direction. Therefore, diffusion should also be taken into account.
Source: Santiment
At press time, the daily circulation had fallen to 33,000 copies, meaning the number of coins engaged in transactions had decreased.
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Given the increase in Bitcoin mining difficulty and network activity, the price of the crypto could see an increase in the medium term. On the target side, the value could rebound towards $73,000.
News Source : ambcrypto.com
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