The hash rate increases while the difficulty slows down, but Bitcoin mining is moving steadily. The industry is growing financially, while a growing number of countries adopt that activity.
The bans of China on mining have caused inconvenience for months, but the growth of the activity has been evident. The Bitcoin network has reached 700,000 mined blocks, alongside the consecutive increase in mining difficulty and hash rate.
There have been constant acquisitions, business partnerships, and miners’ persistence in their operating model. That suggests that the best times for Bitcoin mining could be ahead despite its low profitability.
The Hash Rate and Mining Difficulty Do Not Decrease
Although it has not been its highest point since July, the Bitcoin hash rate is 113.93 terahashes per second (TH/s). However, there is support at other high points present during September, according to data from YCharts.
The network reached its maximum hash rate of 153.7 TH/s on September 14th, while it hit 150 TH/s on September 20th.
Mining difficulty is the mechanism that ensures that the issuance of Bitcoin blocks is not too fast. It increased for the fifth time in a row on September 21st, reaching 18 T.
It does not fully exceed the levels of July and even less those of June and May when it reached its all-time high. However, it has increased so quickly that more computers may have connected to the network.
The Low Profitability of Miners Stabilizes the Price of Bitcoin
Compared to the effort invested and the rewards obtained, the low profitability of miners has not prevented the industry from growing. The decrease in profitability this week may be related to the pullback in the price of BTC.
Based on the Puell multiple, market cycles may be related to how much miners paid to buy BTC. It may also be associated with the price at which they sell to refinance their operations. These include aspects like electricity, payroll, repairs, and acquisitions, among others.
That indicator consists of dividing the current value in US dollars (USD) of the daily issuance of BTC with the annual average of the price in USD of that emission.
An investor could use that index to discover the periods of higher or lower profitability of their investment in BTC. To do this, he would interpret the red band, where the Puell multiple is close to 10, as an area where it is better to sell (liquidate the position). Also, he would see the green band, where the indicator is less than 1, as a buy area.
If the Puell multiple remains in the intermediate zone, the price of BTC can have a stable behavior or reduce its volatility. In addition to financing, miners can take out loans backed by Bitcoin, so the selling pressure to maintain their operations is lower.
The Puell multiple is an indicator that allows determining when it is the most favorable time to sell Bitcoin. However, it is always advisable to do good market research to make the most sensible decisions.
By Willmen Blanco
