Where is the death spiral? Bitcoin mining difficulty has risen 9% since halving.

Bitcoin mining difficulty has increased by 9% since the May 11, 2020, halving, showing that the Bitcoin ecosystem remains healthy despite miners fearing a death spiral.

After the Bitcoin halving, some skeptics speculated that miners would begin to capitulate, or that the price of Bitcoin would send miners into a death spiral. Just three months ago, Bitcoin’s computing power (hash rate) reached a new all-time high. “Miner capitulation.” The term refers to the phase in which coin price drops cause most overleveraged miners and farms to shut down. Miner capitulation could cause Bitcoin’s hash rate to drop significantly in the short term, but Bitcoin’s hash rate has not dropped significantly since May.

Director of Business Development at Kraken: Bitcoin Hashrate Hit a New High "Mining Death Spiral" FUD Debunked Again: Bitcoin's Hashrate Recently Hit an All-Time High, Exceeding 125EH/s, Which Means the World's Largest Cryptocurrency Network Is Now Ever the strongest. Due to this spike, mining difficulty is expected to increase by 9.52% on July 13.

The new high runs counter to the “mining death spiral” narrative that was prevalent in the period leading up to the supply cut in May. Mining disaster predictors claimed at the time that miners would shut down their equipment in droves. As noted by Kraken Director of Business Development Dan Held, the FUD about the demise of the Bitcoin network has now been debunked again. Rather than leaving the network, Bitcoin miners are actively investing in more efficient ASIC mining machines. Back in April, Bitmain started selling its next-generation mining machines (S19 and S19 Pro), with a hashrate of up to 115TH/s. Another noteworthy trend is that the United States is trying to compete for China's mining crown, like the Layer1 plan supported by Peter Thiel to reach 30% of the total computing power in 2021. (U.Today)[2020/7/13]

All-time high hash rates and steady Bitcoin mining growth are both positive signs for mid- to long-term trends.

Turkey has a total of 155,686 confirmed cases and a total of 4,308 deaths: On the evening of May 23 local time, the updated data on the website of the Turkish Ministry of Health showed that Turkey conducted 40,178 tests for the new crown virus that day, and 1,186 of them tested positive. So far, Turkey has confirmed a total of 155,686 cases. There were 32 new deaths that day, bringing the total number of deaths to 4,308. 1,491 cases were cured that day, and a total of 117,602 cases were cured. (CCTV News) [2020/5/24]

An increase in the hash rate of the entire network is beneficial to Bitcoin in the long run

Bitcoin mining difficulty increased by 3.6% on Aug. 24 and has now reached a new high, according to data from Glassnode. Data shows that many miners are actively mining Bitcoin, even more than before the halving.

Bloomberg: Bitcoin faces first threat of "death cross" in three years after falling below $9,000: According to Bloomberg, a new bearish signal may appear after Bitcoin fell below $9,000 on May 11: "Death Cross" . This phenomenon is when Bitcoin’s 50-day moving average falls below its 200-day moving average. This will be the first time Bitcoin has entered a "death cross" since 2015. [2018/5/12]

Bitcoin mining difficulty and Bitcoin price. Source: Glassnode

Although Bitcoin’s network-wide hash rate has been setting new records for years, this time the situation is slightly different.

Three months ago, Bitcoin experienced its third reward halving in history. In this way, although miners spend more on electricity and other operating costs, the number of bitcoins that can be earned every four years has been reduced by 50%, and the production of bitcoins worldwide has also been reduced from 1800 bitcoins to 900 bitcoins.

In theory, rising bitcoin prices should offset miners' lost bitcoin block rewards, but to make mining more attractive, bitcoin's price would have to at least double in the short term.

The rapid recovery of the network-wide hash rate since the halving and historically high difficulty indicates that miners expect strong Bitcoin price action in the medium to long term.

Another reason behind the soaring hash rate across the network may be that the profitability of Chinese miners has begun to increase. Sichuan province is currently in the rainy season, and the abundance of hydroelectric power plants in the region gives miners access to cheaper electricity, reducing their overall costs.

The amalgamation of cheaper electricity in China and miners’ optimism about Bitcoin’s price appears to be catalyzing the hash rate.

Since the halving, the difficulty has increased by 9%, and the growth of the network's computing power is bringing miners closer to surrender.

Does the increase in the hash rate of the entire network mean that the selling pressure of miners has been reduced?

On-chain analyst Willy Woo previously stated that miners are one of the two main sources of external selling pressure on Bitcoin’s price. When miners dump Bitcoin, it tends to put a lot of pressure on the cryptocurrency market.

Based on trends in mining difficulty and hash rate, miners are unlikely to sell BTC in bulk anytime soon.

Unless the price of Bitcoin drops sharply to a level where miners can no longer maintain operations for a while, momentum in the Bitcoin mining industry is likely to remain strong.

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