In a testament to the growing fundamental strength of Bitcoin, the mining difficulty on the network has set a new all-time high, nearing 20 trillion after a 3.62% gain on Sunday, according to data from BTC.com. The adjustment comes after the Bitcoin hash rate, too, soared to record highs.
The hash rate is the measure of computational power that is being allocated to mine the leading cryptocurrency, while difficulty describes the algorithmic difficulty that miners have in finding a block. The difficulty is dynamically adjusted to ensure that each bitcoin block takes around ten minutes to mine.
Difficulty is now at an all-time high, meaning that statistically, it's harder the mine bitcoin than ever before.
While the difficulty adjustment on Monday triggered a 41 EH drop to 116 EH, at press time, the Bitcoin hash rate is back at 146 EH, according to Coinwarz. It is worth noting that often, the seven-day moving average metric, which looks at Bitcoin's hash rate over a seven-day time frame, is preferred to raw values as daily values can see fluctuation due to the randomness in the discover of blocks on the Bitcoin network, which effects the number of blocks mined in a day.
John Todaro, a researcher at a16z-backed data firm TradeBlock, reported on October 19th that the seven-day moving average had hit a new all-time high. Todaro attributes this to the rising price of Bitcoin, which means that more miners are in profit if they run their machines:
"Bitcoin hash rate hit new all time highs (again). The recent price rally has increased mining revenues, pushing more miners to allocate greater resources to the network, thereby increasing hash rate. What ever happened to that mining death spiral thesis after the halving?"
The strength in the hash rate and mining difficulty of Bitcoin highlight the strong on-chain analytics trends the cryptocurrency has been experiencing.
On-chain analyst Willy Woo recently noted that Bitcoin's Network Value to Transactions (NVT) ratio is "at undervaluation levels equivalent to the COVID19 white swan price bottom."
He says that this is "very bullish" for the cryptocurrency as it suggests that the cryptocurrency is dramatically undervalued by the market.
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