Three months after the bull run began in October 2020, Bitcoin mining difficulty has reached a new all-time high.
Previously, the low difficulty of Bitcoin mining amid a bullish trend meant that the selling pressure of miners was lower, as it was compensated by the rising price of the cryptocurrency.
Another factor associated with the low difficulty of mining in the recent past is due to the lack of chips on the market. China, which produces over 60% of BTC mining, is experiencing a significant shortage of new chips. The shortage arose due to the coronavirus pandemic and led to an increase in the prices of devices in the secondary market.
Managing Director of Financial Services for Babel Finance, which provides loans to miners, Lei Tong explained the current crisis:
“The difficulty of mining Bitcoin is the main indicator of competition among miners for the next block, especially when the reward for the third block has halved. Many miners were anxious that they would have to give up mining as the price of BTC lingered around $13,000 and was barely profitable. However, as the price rose rapidly, the difficulty of mining dropped, and mining on older rigs also became lucrative, which reduced competition.”
Over the past three weeks, Bitcoin has taken a break from its three-month bullish drive with a couple of price adjustments of more than 10%, causing BTC to briefly dip below $30,000. The leading cryptocurrency is currently trying to hold above $32,000.
With the increasing difficulty of mining, the price of Bitcoin could well start a new price rally.
