Bitcoin Update: Hash Rate, Mining Difficulty, Accumulation Addresses, $BTC vs Gold

This article looks at what analysts and influencers are currently (as of June 28) saying about Bitcoin’s hash rate, mining difficulty, BTC accumulation addresses, and the Bitcoin vs gold debate.

On June 26, crypto analyst Lex Moskovski, CIO at Moskovski Capital, used Glassnode data to show that the number of unique accumulation address (or effectively the number of long-term holder addresses) have recently been going up. This is how Glassnode defines these addresses:

“Accumulation addresses are defined as addresses that have at least 2 incoming non-dust transfers and have never spent funds. Exchange addresses and addresses receiving from coinbase transactions (miner addresses) are discarded. To account for lost coins, addresses that were last active more than 7 years ago are omitted as well.“

Yesterday (June 27), Zack Voell, former Coindesk journalist and current Research and Content Director at Compass Mining, wrote about the large drop in Bitcoin’s hash rate and difficulty level following the recent crackdown on mining in China, and he had some reassuring words for Bitcoin HODLers.

Voell says:

  • “Hashrate almost always goes up and to the right, but China’s crackdown broke that trend for now. I’m surprised we haven’t seen more “miner death spiral” headlines at this point. Those are probably coming soon. Hash power rarely (if ever) disappears though. It’ll be back.“
  • “Lots of Chinese hash power is coming to North America (Down pointing backhand index) but perhaps not as much as some people think… Lots of ASICs are simply going into storage… Lots are moving to KZ, UA, RS, and wherever else there’s rackspace!“
  • “As miners leave China, almost every top bitcoin mining pool has lost at least 10% of its hashrate, with most down between 30% to 80%.“
  • “The silver lining to all this is, of course, profitability for miners with ASICs still online. Mining bitcoin is already marginally easier now than it was at similar price levels in January. And with a record difficulty drop this week, those profit margins should grow even more.“
  • “Bitcoin’s hashrate won’t bounce back immediately. It’ll take a while. The process of relocating and relocating ASICs will be longer than most people expect. And who knows what the price will do in the meantime.“

His final thoughts were:

  • “Expect some “death spiral” headlines.“
  • “Everything that’s happening is massively bullish long term.“
  • “Hashrate will never re-concentrate in a single region a la China.“
  • “There’s almost never been a better time to mine bitcoin.“

Earlier today, macro economist and crypto analyst Alex Krüger also commented on the large drop in Bitcoin’s hash rate and said that this seemed like a perfect time to get into BTC mining for those in locations where low cost electricity is available.

Adam Back, Co-Founder and CEO of Blockstream, however disagreed with Krüger about how much Bitcoin’s hash rate has fallen. He tweeted:

“no it has not “dropped -70%” it’s not quite -50%… people really need to get up to speed and not look at short-term inaccurate block-interval inferred hashrate. the peak real-hashrate hasn’t been over 160EH, and current is 85EH so a drop of about -47%. and it dropped over time.”

Charlie Morris, Founder and CIO at ByteTree Asset Management (subsidiary Crypto Composite Ltd), pointed out that on June 27 the Bitcoin network experienced its highest average block interval in Bitcoin’s history (since BTC “has had a price”), and said that this was caused by the mining ban in China.

Morris expects Bitcoin’s average block time to return to 10 minutes (i.e. 600 seconds) once Bitcoin’s mining difficulty is adjusted (this is expected to to take place at block height 689,472, or on July 2).

And finally, crypto analyst and influencer Lark Davis said today that he sees Bitcoin as the “new gold” and that he expects to see before the end of this decade the market cap of Bitcoin reach the market cap of gold, meaning that he thinks the Bitcoin price could go as high as $550K.

Davis went on to give a few reasons for Bitcoin’s superiority over gold:

  • “Gold of any significant quantity is difficult to transport, whereas a billion worth of Bitcoin can be moved anywhere for a few dollars in fees in less than an hour and can be kept in your pocket on a ledger…“
  • “Bitcoin is easy to verify. Thanks to the public nature of the blockchain you can easily and personally verify your BTC and any transaction. Gold requires special machines to authenticate.“
  • “Bitcoin has a verifiable and fixed max supply… For gold there is no way to audit all the existing mined gold on earth…“
  • “Bitcoin can be divided into 100 million individual units with ease… Gold in theory can be divided into tiny fractions, but unless you are carrying a bag of gold dust this is hard to do.“
  • “Bitcoin is censorship resistant… Gold is highly censorable considering the difficulties in moving it from point A to B.“
  • “Bitcoin is increasing in adoption at an exponential rate…“
  • “In order to hold your own gold you will need to pay high premiums over spot price to get physical gold. Whereas Bitcoin markets are highly efficient for acquiring the asset at spot price and taking delivery.“
  • “Gold does have the bonus of being able to hold it in your hand… Also in an end of the world situation the internet is unlikely to work so no more BTC…“

DISCLAIMER

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

IMAGE CREDIT

Photo by “petre_barlea” via Pixabay

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