Bitcoin hash rate continues to climb, rising 167% in the past year.

Despite a drop of around 41.5% compared to its peak in 2019, Bitcoin, the hashing power securing the network continues to climb, indicating a long-term investment sentiment in the asset.

According to Crypto This, data shows that the mining difficulty of the Bitcoin network is expected to increase by 8% on Tuesday afternoon this week, in the United States, bringing the mining difficulty of the Bitcoin network to approximately 1.5 trillion. According to BitInfoCharts, this indicates that the computing power of the Bitcoin network has increased by about 167% since January 2019.

Why is the computing power increasing while the price is falling?

Of course, the price of Bitcoin has also risen over the past year, from around $3,500 a year ago to $8,100 this week. Obviously, a higher Bitcoin price naturally leads to an increase in network computing power, as more mining machines online can generate greater profits for miners.

However, it is worth noting that the mining difficulty of Bitcoin dropped at an unprecedented rate before the end of 2018, plummeting from 7.4 trillion to 5.1 trillion in just two months, a decrease of about one-third. At that time, concerns about the so-called "mining death spiral" even arose but were easily debunked.

In other words, the computing power of Bitcoin hit a low point near the end of 2018, leaving ample room for an increase, especially after the price started to rebound.

Despite reaching its peak for the year in June 2019, Bitcoin's computing power has continued to climb. When considering the reasons for this, it is important to remember that the crypto mining industry operates from a long-term investment perspective, with high upfront costs for mining machines, long-term lease of premises, electricity costs, and other factors to consider. In other words, computing power follows long-term trends rather than short-term fluctuations in Bitcoin prices.

How will the halving affect this trend?

Of course, some may wonder if the upcoming halving—where the number of new Bitcoins created every ten minutes will be halved—will have a negative impact on network computing power. Under all other conditions being equal, it should in the long run, as the decrease in Bitcoin mining incentives post-halving is expected to reduce computing power.

However, this does not mean that the computing power of the Bitcoin network will immediately plummet after the halving. In fact, after the only two halvings in November 2012 and July 2016, Bitcoin's computing power saw significant increases. These increases in computing power following the halvings may have been due to the subsequent large-scale Bitcoin bull markets.

Additionally, the Bitcoin Cash network will also undergo its own halving about a month before Bitcoin's, which poses security concerns.

Computing power always follows long-term price trends, so the ultimate impact of the halving on computing power will depend on how the halving affects Bitcoin prices. However, in a scenario where prices skyrocket in the short term, old mining machines can quickly come back online.

At this juncture, there is a significant difference of opinion on whether the upcoming halving has already been priced into the Bitcoin market. Nevertheless, the fact that Bitcoin's computing power continues to rise even as the price falls indicates that people have been making long-term investments in this asset over the past year.

This article is from our partner LONGHASH

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