BTC miners minted 19 million tokens and network difficulty is all-time high now. What does that actually mean? Should you buy Bitcoin now or wait?
As we all know, BTC circulating supply can’t exceed 21 million tokens. That’s how the God Satoshi created it.
During the first years after the Bitcoin launch, mining new tokens was quite simple.
These days are long gone. Now you need expensive mining rigs to mine Bitcoin. And the bills for electricity are as high as NBA players.
Despite its high volatility BTC continues to grow. And as more users are attracted to Bitcoin, the network expands and mining difficulty increases.
Bitcoin’s scarcity and the mining difficulty are the two factors that drive up the price.
A couple of years ago you were surprised by BTC climbing to $10,000. Now you are wondering should you buy BTC at $46,000 as it may soon skyrocket even more.
So – when you are already in doubt – news about those 19 million of minted BTC can be confusing.
What does that mean? Is it a clear sign to buy some BTC? Or is it just something of technical field you should not pay attention to?
Let’s try to get things straight.
What happened to Bitcoin mining, should I buy?
Let’s analyze the scary news.
Miners reached 19 million BTC minted tokens and made the network’s mining difficulty all-time high.
In numbers mining difficulty now is 28.587 trillion and the estimated hash rate is 201.84 exahash per second (EH/s).
With just 2 million BTC left to mine as rewards and an influx of Bitcoin miners from across the world, the BTC network is expected to increasingly grow stronger as it supports the thriving community, experts say.
Yes, this is how weird Bitcoin is.
The less tokens are there to mine, the more difficult is the mining process.
We have been mining for 12 years now and have got 19 million BTC.
The remaining 2 million BTC will have been successfully mined somewhere near the year 2140.
You see, that’s what makes Bitcoin so unique. With limited supply it will eventually become something like gold. Scarcity indeed makes things more valuable. That’s the law of economy which Satoshi Nakamoto understood perfectly.
At the time of writing, analysts are arguing whether Bitcoin is able to reach $100,000 by the end of 2022. But in the long run the predictions are much more bold. Recent report from Van Eck Associates says Bitcoin value to reach $1.3 million with gold topping $31 000 per ounce, if the assets become the sole reserve asset across the globe.
So the role of Bitcoin mining is not to be underestimated. You should definitely consider rising mining difficulty as a signal. Bitcoin is becoming more and more scarce. It points to increasing prices.
What’s next for Bitcoin?
Let’s clarify this once again. Increasing mining difficulty is a brilliant mechanism to protect Bitcoin from inflation, which is a plague for any fiat currency, and to make sure it is scarce.
As the Bitcoin whitepaper says, the first block reward in 2009 was 50 BTC. In 2012 it decreased to 25 BTC, in 2016 – to 12,5 BTC. For now, the reward is about 6,25 BTC per block which was established in 2020.
The next halving event will occur two years from now. And it’s essential, as halving symbolizes Bitcoin’s deflationary tendency regularly. In other words, halving decreases BTC supply and causes prices and demand to rise.
But some Bitcoin adepts think that the BTC halving process could cause problems in the future. The main concern is a long term drop in mining profitability.
Yes, it might sound funny for some people who recently considered entering Bitcoin mining, but abandoned this idea after long consultations with their calculator.
But things may get even more strange.
Mining is not only about getting new tokens. Mining is essential to the Bitcoin blockchain network itself.
Bitcoin is using the Proof-of-Work (PoW) consensus mechanism. So mining is required for validation of transactions and as such will always need energy for maintaining the network.
Bitcoin will never transit to the Proof-of-Stake (PoS) mechanism like Ethereum is doing right now. Simply because of its philosophy and the core principles underlying its architecture.
What BTC price to expect now?
So we found out that mining is essential for Bitcoin and is becoming more and more complicated.
How will it affect the price of Bitcoin? And should I buy Bitcoin knowing all that stuff?
According to the last technical analysis by CryptoPotato, Bitcoin is due to a correction soon. But this correction should be essential for a healthy rally.
If the price experiences a drop to lower support levels around $45 000 and the breakout continues, then we should see the next significant resistance is at around $52 000.
But that’s just the tip of the iceberg.
The bulls are now debating about BTC running to $80 000, which could be the new price record.
Independent market analyst Philip Swift noticed that Bitcoin‘s price charts are showing relative signs to its 1-year moving average (MA). And he thinks that, historically, this is an important level for Bitcoin signaling the start of a bullish trend.
And while Bitcoin remains a risky asset, generally when you hear this kind of talks, you know you should buy some BTC.
So should I buy Bitcoin now or wait?
So we went into details with mining difficulty, but there are other variables that can affect Bitcoin development.
Here is the list of the most important factors that might influence Bitcoin prices both in short and long term:
- BTC regulation,
- Exchange Traded Funds (ETF),
- widespread adoption of crypto,
- world eco-politics events like the Russia-Ukraine war, pandemic, etc.
Most of these factors have recently played in favor of Bitcoin.
Even the war in Ukraine proved to be quite useful – no matter how cynical it may sound – for crypto future. Bitcoin and other cryptocurrencies have shown high efficiency as the way of transferring assets abroad and even to finance the army.
Global processes happening in the world can be a chance for international investors to treat alternative currencies as a new stable platform to hold their capital.
It is also obvious that the leading countries don’t want to fight crypto anymore. Instead, they are creating conditions for making digital assets legal and easy to use.
Crypto ETFs have become reality in some countries, and hopefully, they can align the high volatility of digital assets, making them much less risky as financial instruments.
Lots of big socio-economy institutions already placing an eye on crypto. Even prolonged anti-Bitcoin mogul Warren Buffet launched some investing in the digital assets industry. Should you buy Bitcoin too?
Everything looks bright and optimistic. BTC and its younger brothers and sisters definitely have some good chances. At least for now.
Sources: Cointelegraph, MarketWatch, CryptoPotato, Forbes, Northglen News
Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of cryptolife.report. Every investment involves risk, so you should always perform your own research prior to making important decisions. We do not recommend investing money you cannot afford to lose.
