Bitcoin Fundamentals Diverge from BTC Price Decline as Difficulty Hits New All-Time High Cointelegraph

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Bitcoin (BTC) may have hit a six-month low this week, but under the hood the network is now stronger than ever.

Data from on-chain monitoring resources, including glass knot and BTC.com confirms that as of Friday, Bitcoin network difficulty is at a new all-time high.

Difficulty exceeds 26 trillion for the first time

Difficulty, which expresses how hard miners must work to solve the equations to process transactions on the blockchain, is arguably the most important of the fundamental components of the Bitcoin network.

The metric automatically adjusts to increase or decrease mining effort based on miner participation – the greater the competition between miners, the higher the difficulty.

This has the effect of keeping mining stable regardless of factors such as sentiment, price, or unforeseen mishaps.

After dropping in mid-2021, difficulty took the rest of the year to rebound, with the latest automated readjustment adding 9.32% to the previous level. With that, he entered uncharted territory above 26 trillion.

Commenting on the event, journalist and cryptocurrency commentator Colin Wu Noted that the increase is the highest in over six months, with data from BTC.com confirming that late August saw the latest adjustment of over 10%.

BTC price drop fails to break miners’ resolve

The difficulty has therefore logically followed the higher hash rate, which has not stopped setting new records last year.

Related: Bitcoin Demand “Bear Market” Breakout Will Trigger Next BTC Price Surge – Analysts

The hash rate, an estimate of the processing power dedicated to the blockchain by miners, currently sits at 192 exahashes per second (EH/s), after briefly hitting 218 EH/s on January 10, according to MiningPoolStats.

Bitcoin hash rate for the week starting January 17 (screenshot). Source: MiningPoolStats

As Cointelegraph often reports, an old mantra among age-old hodlers is that “price follows hash rate,” with this trend nonetheless taking a back seat for many as fundamentals move in the opposite direction to spot price.

The increasing hash rate therefore implies that over longer periods of time, miners’ optimism about the profitability of their operations remains. Last week’s calculations revealed that their break-even point was around $34,000.