The difficulty with Bitcoin mining had adjusted upwards for most of 2022 and recorded its highest in the same year correction. However, 2023 started on a downtrend as mining difficulties started to decrease. A sharp drop in this metric in the early hours of Tuesday could be the start of a trend reversal in this regard.
Bitcoin mining difficulty falls
Bitcoin mining difficulties abruptly dropped Tuesday morning during the Asia Hours. Data from CoinWarz shows it was down nearly 3.6% in a sharp downward correction. This lowered the mining difficulty from the 35.36T it tended to to to 34.09T after the adjustment.
Bitcoin mining difficulty is important in that it actually measures how much energy is required to verify blocks of transactions on the network. The higher this number, the greater the demand for it Bitcoin-Network. And the lower it gets, the fewer miners there are on the network.
One factor that has had a profound impact on mining difficulties over the last month was the blizzard that swept through the United States. When temperatures dropped dangerously low in some places, the miners had to switch off their machines to relieve the energy grid. This was done to leave citizens with enough energy to power their homes.
BTC price at $16,700 | Source: BTCUSD on TradingView.com
Effects of this on BTC
Bitcoin price is still faltering despite the sharp downward correction in mining difficulty. The digital asset is still in the mid-$16,000s and has refused to budge. Even the return of some momentum with the new year has not been enough to trigger a move past this point.
So looking at the bigger picture with the difficulty adjustment and the price, it doesn’t look like there is a profound impact on the price. Plus, miners are still seeing similar profitability from their mining operations, so there’s no tipping the scales towards sell-offs or holding.
As long as the price continues to hold above the $16,600 level, there should not be any downtrend in the price. However, if it breaks below this support then $16,000 is more likely than $17,000 in the short term. Also add in the fact that several events like the DCG and Gemini debacle are playing out over the next month and it’s for the cryptocurrency becomes essential to get support.
Bitcoin was changing hands at a price of $16,700 at the time of writing this article. With a market capitalization at $322 billion, it remains the largest cryptocurrency in the sector.
Featured image by CoinDesk, chart by TradingView.com
Source: Crypto News Deutsch