Bitcoin, as a digital currency, has attracted worldwide attention. As the Bitcoin halving event approaches, the mining difficulty reaches a new high again. What impact will this change have on the Bitcoin market? Let’s dig into it.

 Bitcoin Halving: Mining Difficulty Rising

Bitcoin’s halving means that the mining reward is halved every time 210,000 blocks are mined on the Bitcoin network. This mechanism is designed to keep the total supply of Bitcoin limited, thus stabilizing its value. However, as the Bitcoin halving event approaches, mining difficulty also rises. The increase in mining difficulty means that the computing power and electricity costs required for mining also increase, making mining more challenging.

 The impact of rising mining difficulty on the Bitcoin market

The increase in mining difficulty will directly affect the supply and demand of the Bitcoin market. As mining becomes more difficult, the creation of new Bitcoins slows down, which can lead to a reduction in the supply of Bitcoins. At the same time, the increase in mining costs may also cause some miners to withdraw from the market, further affecting the supply of Bitcoin.

 Bitcoin price fluctuations and investor mentality

The volatility of the Bitcoin market has always been the focus of investors' attention. The increase in mining difficulty may trigger fluctuations in the price of Bitcoin, and the mentality of investors may also fluctuate accordingly. Some investors may be worried about the increase in mining difficulty and worry about the decline in Bitcoin prices; while other investors may see this change as an opportunity and be the first to make arrangements.

 Market expectations and risks of Bitcoin halving event

The Bitcoin halving event has always attracted market attention, and all walks of life have different expectations and risks for this event. Some people believe that the Bitcoin halving will further push up the price of Bitcoin and bring more investment opportunities; while others are worried that the uncertainty of the market after the halving event may bring greater risks.

 Conclusion: Seize the opportunity and invest in Bitcoin rationally

As a new digital currency, Bitcoin's market changes are full of uncertainties and opportunities. As the Bitcoin halving event approaches, investors should remain rational, seize opportunities, and at the same time have a clear understanding of market risks. Only through continuous learning and adjustment can we better invest in Bitcoin and achieve the goal of wealth appreciation.

Through an in-depth discussion of the Bitcoin halving event and its impact, we can better understand the operating rules of the Bitcoin market and make more informed investment decisions. Let us witness the changes in the Bitcoin market together and explore the infinite possibilities of the digital currency world.

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What impact will mining have on Bitcoin halving? According to data from BTC.com, Bitcoin has adjusted the mining difficulty, raising it to 15.54T, setting a new record high and rising by more than 20% from 12.95T at the beginning of this year. The average computing power of the entire network reached 111.23
EH/s, an increase of nearly 13% from the beginning of the year. The continuous investment in computing power proves that miners are optimistic about the Bitcoin market this year.

The increase in Bitcoin has indeed given people a lot of confidence, with an increase of 21.21% in the past 30 days. Not only Bitcoin, all the mainstream currencies that have reduced their production this year have performed well: BCH has increased by 70% in the past 30 days, BSV has increased by 127%, ETC has increased by 125%, and Dashi has increased by 126%.

The halving market has driven up currency prices, once again igniting the currency circle.

Is computing power not growing fast enough?

What does not match the hot market is that the mining difficulty growth this year has not been high, and the speed shows signs of continuing to slow down.

The new type of pneumonia is spreading across the country, affecting various industries. Although the degree of automation in the mining industry is relatively high and the impact is relatively small, relevant positions and businesses are still hindered to some extent.

Currently, one of BTC.top’s mines is shut down; mining machine manufacturers such as MicroBT are also delaying shipments.

Bitmain Sales Director Fan Xiaojun said in an interview that due to the impact of the epidemic, most employees are now unable to return to work on time, and there will be a certain delay in the delivery of chips, supply chains, and materials. The following situations should occur: 1. The number of newly produced mining machines will decrease; 2. The growth of the computing power of the entire network will become very slow; 3. The value of the existing mining machines in the market will become higher; 4. If the difficulty and currency price , when electricity costs are constant, the total computing power of machines with high J/T may be reduced by halving and eliminating them.

The figure above shows the growth data of Bitcoin’s computing power and difficulty during the two bull markets from the end of 2017 to the beginning of 2018 and mid-2019. The growth rate exceeded 10% many times. But in the past month this year, the highest increase in difficulty was only 7.08%.

In addition to being affected by the "black swan" event, mining investment itself will also lag behind to a certain extent.

When the bull market starts, miners wait and see, and wait until they are sure that the market will continue to rise before entering the market steadily. It takes a certain amount of time to purchase mining machines and rent sites in the early stage, so the time when the computing power is actually put into use will be delayed by the fluctuation of currency prices. When the currency price fluctuates, existing miners will still choose to wait and see for a period of time. Although the speed slows down at this time, new miners are still pouring in. As currency prices continue to fall and the bull market is coming to an end, miners will withdraw from the market when the ROI reaches a certain ratio.

What is the impact of rising mining difficulty?

The reason for the increase in mining difficulty is the continuous increase in the computing power of the entire network. Bitcoin uses the POW consensus mechanism to generate a block every ten minutes. As the computing power increases, the time interval between generating blocks will become shorter and shorter. Due to network delays and other reasons, if the interval continues to become shorter, it will be due to the overall Because some nodes in the network did not receive information in time, there were disagreements in mining, confirmation, etc., resulting in a large number of orphan blocks, which affected system performance. Therefore, mining difficulty must be dynamically adjusted.

The continuous improvement of computing power means that miners have begun to invest huge sums of money to participate in Bitcoin mining. Among miners, there has been a trend of "increasing competition difficulty - investing in more mining machines and increasing the probability of successful mining -
The cycle of "further increasing competition difficulty", due to the increase in investment, the cost of mining Bitcoin is constantly increasing, so in theory, it will push the price of Bitcoin to continue to rise.

But now the price of Bitcoin is rising in the encryption market. The direct reason does not come from the increase in costs, but the market is generally optimistic about the price trend of Bitcoin, resulting in a market situation in which supply exceeds demand. The Google search volume for Bitcoin has surged, with an increase of 33% in the past week; 67.22% of Btimex’s Bitcoin perpetual contract purchases are evidence of the relationship between supply and demand.

When the cryptocurrency is halved, the price will rise in a short period of time due to the relationship between supply and demand. However, as the market sentiment passes, the price will gradually fall back, and a large amount of computing power will be migrated to cryptocurrencies that are compatible with mining machines and are more objectively profitable.

Taking the Antminer S17+ mining machine as an example, it can switch between BTC, BCH and BSV. Dan, Head of Kraken Exchange
Held expressed his views on the BCH halving, saying that the halving would be disastrous for BCH because it would result in less block rewards. Miners would switch their computing power to BTC, which is about to be halved, and the security of BCH would become lower.

With the same logic, a large number of miners involved in BTC mining will also switch to other currencies if their profits decrease after the halving. As for the huge computing power of Bitcoin, even the top five market capitalization BCH and BSV are simply unable to withstand it, which will be another challenge to their network security.

And if the entire halving market passes and falls into the bear market again, once the shutdown price of mining machines is about to be triggered, the "mining disaster" of mining machines being sold by the pound will reappear.