What spiral of death? Difficulty of Bitcoin mining has increased by 9% since halving

After the halving on May 11, some skeptics speculated that the miners would surrender and the whole process would enter a spiral of death. Fast forward by three months and the bitcoin hashrate is at a record high. Hashrate on ATH and a stable mining industry are positive signs of a medium to long-term BTC trend.

No death spiral, a growing hashrate is positive for Bitcoins

According to Glassnode, the difficulty of Bitcoin mining increased by 3.6% on August 24 and is now at a new high. The data show that many miners are actively mining BTC, even more than before the halving.

Three months ago, Bitcoin underwent its historically third halving. Due to a solid supply of 21 million, the rate at which the remaining supply is halved every four years is declining. As a result, miners earn 50% less BTC after each halving, despite higher costs for electricity and other operations.

Theoretically, the rising price of BTC should compensate for the lower number of BTCs that miners earn, but the price would have to double in a short time to make mining more profitable.

The rapid recovery of the hash value from the head and the difficulty at new highs suggest that miners expect a strong medium-term trend in Bitcoin prices.

Another reason for the increase in hashrate may be the profitability of miners in China. Sichuan Province is currently going through a rainy season, and the abundance of hydropower in the region allows miners to obtain cheaper electricity, which in turn reduces their overall costs.

Cheaper electricity in China and the miners’ optimistic attitude towards the price of BTC seem to catalyze the hashrate.

Mining sector is nowhere near capitulation

The term mining capitulation refers to the phase in which most weak and small miners are turned off. Capitulation could cause the BTC hashrate to decrease significantly, but there has been no significant decrease in the hashrate since May.

Anaclytic Willy Woo previously said that miners are one of the two main sources of external selling pressure on the price of Bitcoins. When they sell BTC, it tends to put significant pressure on the crypto market.

Based on the mining trend and the hash rate, miners are unlikely to sell BTC in bulk in the near future. If the price of BTC does not fall sharply to such an extent that they will no longer be able to maintain operations for some time, the pace of the mining sector is likely to remain strong and no death spiral will take place.

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