The Bitcoin (BTC) network fundamentals continue to improve as the mempool size strongly decreased since the beginning of November. Bitcoin miners are increasing in numbers again. But what is the mempool, and why did it increase in size in the past couple of weeks? Let’s find out!
The Bitcoin mempool in short
Bitcoin is a peer-to-peer network on which people can send BTC directly to each other. Under the hood, however, the network consists of many complex computer codes and systems that contribute to making Bitcoin one of the biggest revolutions in modern times. The most crucial party within the Bitcoin ecosystem is the bitcoin miner.
Bitcoin miners process bitcoin transactions. To do this, they have to find the solution to a complex mathematical calculation. We could write many separate blog posts about this topic, but for now, let’s dive deeper into the step before the miners. Once you have made a payment, a miner has to include your transaction in their process. But what happens if a miner does not pick up your transaction?
In the period in which your transaction isn’t picked up yet by a miner, it is stored in the mempool. Simply put, it is the waiting room for BTC transactions. The size of the mempool is an indication of how many transactions are being picked up by miners. Is the mempool big? That means miners have a lot of work and cannot process all the payments as fast as possible. Is the mempool small? That means the network is nicely balanced, and transactions are being picked up quickly.
Why did the mempool increase in size?
Since the end of October, the mempool has started growing. This growth happened after a period in which it stayed reasonably small. But why did it increase in size so suddenly? For that, we have to look at China. Many bitcoin miners in China turned off their mining rigs because they didn’t have access to cheap energy anymore. This was because the rainy season had ended, which led to hydropower plants not being able to generate as much electricity anymore.
As these miners turned off their bitcoin miners to start their yearly migration to different provinces in China, the Bitcoin network’s hash rate started to drop. This drop leads to the block times becoming longer and more transactions being held up in the mempool. But luckily for those who want to send bitcoin, the Chinese bitcoin miners turned on their machines again after a few weeks!
With that, the hash rate is recovering fastly as well. At the time of writing, Blockchain.com shows that the total hash rate is 127.5 million terahashes per second. The increasing hash rate means that the expected difficulty adjustment will be about +5%. In other words, the Bitcoin mining industry looks healthy and keeps getting stronger!