The bitcoin (BTC) price has seen some big movements the past weeks. Many analysts therefore were expecting that bitcoin miners would capitulate en masse. However, data shows that at this moment there are no signals of miners capitulating, even when the price is moving down.
Recent BTC price movements
In the beginning of this year bitcoin found the bottom of the bear market that most of the crypto community knows as the ‘crypto winter’. This bottom was found just above the price mark of $3.000. In April the bitcoin price started moving again after a couple of months of sideways trading, right above the $3.000 mark.
Within two months time, the bulls managed to push the price all the way up to a high of $13.868. With the bitcoin price rising, also the hash rate rose significantly in this period. After the harsh crypto winter, during which many miners had to stop mining due to losses, they now had a chance to be profitable again!
After BTC reached its yearly high, the price slowly started moving down again. Support after support was broken, and recently bitcoin reached the $6.500. Many analysts were expecting that a large group of miners once again would have to stop their operations due to the low price. Data shows that at this moment, this is not the case.
Miners still have trust
To measure the level of participation of bitcoin miners, we can look at two measurements; the hash rate and the difficulty. When we look at the hash rate, we see that it has been rising since the bottom of the crypto winter was reached. Even after BTC reached its yearly high and started decreasing in value again, the hash rate kept on rising.
Not so long ago, the hash rate even managed to reach a new all-time high. On the 23rd of October, the bitcoin network generated 114.342.004 trillion hashes per second. The fact that the hash rate keeps on rising possibly shows that more and more bitcoin miners have trust in the future of Bitcoin, even when it might not be as profitable as earlier this year.
The second measurement we can look at to determine the mining participation in the network, is the difficulty. This is a measure that determines how difficult it is for a miner to find the target hash, with which it can successfully add a block to the blockchain. The higher the difficulty, the more difficult it is to do this. The estimations of the difficulty degree are easier to make and can therefore give a more accurate picture of the current state of the network.
The difficulty is adjusted every 2016 blocks. The Bitcoin protocol looks at how long it took to mine these 2016 blocks and determines a new difficulty based on the average time interval. When there were more miners mining blocks, the block times are shorter than 10 minutes as the chance that one of the miners found the target hash was bigger. In that case the difficulty goes up to keep the block time close to 10 minutes.
In other words, the difficulty shows how much competition there is, and thus can be a measure to determine miners sentiment. Blockchain.com shows that also the difficulty has been rising after the bottom of the crypto winter was reached. And while the price dropped significantly in the past couple of months, the difficulty doesn’t seem to have changed much. This could again be a sign that miners still have trust in Bitcoin.