Bitcoin (BTC) set a new all-time hash rate high last week, but opinion is divided on whether the trend can continue.

In a Twitter debate on March 21, Preston Pysh, host of The Investor’s Podcast, saw a change in the behavior of Bitcoin’s hash range indicators, looking for signs of a “slowdown” in the new hash rate.

Questions about the “cooling” of the hashrate after all-time highs
According to estimates from monitoring source MiningPoolStats, bitcoin has beaten the odds over the past year to see the computing power dedicated to mining — the hash rate — hit 222 exahashes per second (EH/s) this month.

First, China caused a massive exodus of miners, then the demolition of mining shacks in Kazakhstan this year put a cat among the doves when it came to mining.

However, in both cases there has been a full recovery, supporting the notion that as long as there is at least one “friendly” jurisdiction for miners, mining will be harder than ever.

Hash bars use two simple moving average (SMA) hash rates to estimate the health of miners and are used to determine when potential low prices are close based on that health.

Miners have a break-even cost to produce each bitcoin, and when the spot price is below that cost, there is a risk of “capitalizing” or shutting down operations due to lack of profitability. This has the contagious effect of lowering price and performance, and the difficulties of the Bitcoin network need to be corrected to collectively lower the production costs of miners.

In the case of cannabis bars, when the 30-day SMA crosses the 60-day SMA, it indicates a capitulation event – ​​at least large enough to be measurable.

“Simple moving averages of one and two month bitcoin hash rates can be used to determine market lows, miner capitulations, and even the best moments to buy bitcoin,” Charles Edwards, CEO of Capriole Asset Manager who created Metrics, explained in a blog post. in 2019.

“When the one-month simple moving average hash rate crosses the two-month simple moving average hash rate, the metal’s worst capitulation usually ends and a recovery begins.”
This time, the impetus for capitulation could be the events in Kazakhstan, which had already been missed in terms of hash rate growth.

“Profitability is still very high. Production costs are low – about 30 s. Electricity (operational) costs are low at 20s,” Edwards Pysh responded, citing Blockware analyst Joe Burnett’s theory.

“I think [Burnett’s] talk about Kazakhstan makes a lot of sense. So perhaps this is a kind of capitulation (assuming broader macroeconomic/market power).”

Bitcoin hash bars vs BTC/USD chart. Source: glassnode
Difficulty Setting for Altitude Recording
And it’s not just the hash rate: mining difficulties also have a winning streak that looks set to resume this month after a short confluence.

Related: Bitcoin ‘could easily see $30K’ with stocks due to 30% drop in 2022 – Analyst

As the most important underlying indicator for Bitcoin, difficulty should increase by around 4.66% on the next automatic adjustment within eight days.

The last two adjustments have been passive but subtle, meaning the next rally will put pressure on new records of $28.73 trillion.

Source: CoinTelegraph

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