According to recent data, BTC hash rate has reached yet another crucial high point, exceeding a rate of 140 exahash per second. Miners are hard at work trying to make the most of their current rates in expectation of the coming halving event for the world’s most valuable cryptocurrency.
In less than a week, Bitcoin’s final halving event is going to take place. At that time, rewards for mining bitcoin blocks will be cut in half, doubling the operating costs for Bitcoin miners. In preparation for that, bitcoin miners have turned up the heat. Currently, miners receive 12.5 bitcoins per block mined, but that number will be reduced to 6.25 in a matter of days. In response to the halving, exahash rates per second have reached a new high as miners scramble to maximize on the little time they have left.
In conjunction with increased hash rates, prices for bitcoin have been higher than previously expected. Ending last month at $9000 plus and hovering safely above the $8200 support level for the following week shows that BTC is currently sitting in a strong position. Over the past few hours, BTC prices have risen to nearly $10000, with many analysts expecting prices to go even further.
1/ Before next week's halving, it's useful to think about how shockingly few #bitcoin in the future will come from mining and the implications for entrepreneurs and holders.— Joseph Kelly (@josephkelly) May 6, 2020
Historically, mining hash rates and coin prices have also shown a close relationship. Back in 2017, when the price for bitcoin reached $19600, the hash rate was also high - although ‘high’ at that time was much lower than today’s standard, the exahash rate per second of 14 was hitting new highs. Since then, hash rates have risen exponentially, with highs of 100EH/s in 2019 and now 140EH/s leading up to bitcoin’s final halving event.
There is much speculation as to how the incoming halving event will affect bitcoin prices. In the past, bitcoin mining rewards being halved provided considerable valuation for the cryptocurrency. Today, some are predicting that prices are already dialed in while others believe that price action will look a lot like what we saw with the previous two halving events. Of course, it is always difficult to know exactly which way things will go, but to be ready for things to move in either direction is always wise.
That said, there is some data that indicates the expectation of a big bitcoin payday - notably, the hash rate and bitcoin price tag.
With the halving event scheduled to take place on May 12th, what happens to those numbers will be indicative of what’s to come.
Whether prices are ‘dialed in’ or not, it is important to remember that in the current market, bitcoin is set to do something directly contrasting what world fiat markets are doing in response to global economies shutting down. Instead of printing truckloads of new money, bitcoin is getting ready to turn up the scarcity dial. Whether prices go up quickly or over several weeks, an increase in value is all but guaranteed. That’s not to say that a correction will not come in to test some of the lower support levels, but most expect considerable price gains incoming even if and when that happens.
Another benefit of bitcoin now moving in an opposite direction from most other fiat currencies is that many investors are taking notice in the cryptocurrency as a way to maintain the value of their investments as fears of economic instability continue to rise. As it is impossible to inflate bitcoin, it is particularly well suited to protect an investor’s assets in times of hyperinflation affecting traditional markets.
It has become clear that miners are in no hurry to sell their freshly minted bitcoins in preparation for the halving event. There are a couple of reasons as to why most miners would be holding back on selling their new bitcoins.
Miners are hoarding almost all of the Bitcoin they mine, showing that they expect a much higher price after the halving https://t.co/t6hxjazOPU— Cointelegraph (@Cointelegraph) May 7, 2020
With the recent price jump for the popular cryptocurrency reaching levels near their March highs, miners do not have to sell as many coins to meet operational costs. That means, they have more freedom to hold on to coins they predict will bring in greater value later. So, in a nutshell, with most of the world’s miners holding on to their freshly minted bitcoins, we could say that there is a general belief that prices will continue to expand.
Miners holding on their new coins could also mean that they are looking forward to using ‘cheaper’ coins to balance out the effects of incoming restructuring challenges. While this also points to a situation where bitcoin price is expected to go higher, one must wonder how much control over future price action that move will provide for bitcoin miners.
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