The only reason I’m buying Bitcoin today

It’s time for Bitcoin (CRYPTO: BTC) investors to ignore the price and focus on other metrics. Two in particular: hash rate and mining difficulty.

Hash rate is a statistic that measures the computational power required to mine Bitcoin. You can think of it as horsepower in a car. As Bitcoin’s hash rate increases, it means the network is becoming more powerful.

The second metric is mining difficulty, which quantifies the chance of successfully mining Bitcoin. The two are highly correlated, so when one increases or decreases, the other eventually follows.

This is because Bitcoin’s mining difficulty is automatically adjusted every two weeks to ensure that the creation of a new block always takes around 10 minutes. If there is an influx of miners or if miners start using more powerful computers, the difficulty of mining increases so that blocks are not created too quickly. If there is an exodus of miners from the network for any reason, the difficulty is reduced so that the limited number of miners can continue to maintain a block time of 10 minutes. All of this is calculated automatically by Bitcoin’s code and requires no supervision. It really is quite spectacular.

Increases in mining difficulty and hash rate are seen as a sign that the Bitcoin network is becoming more decentralized and secure. These characteristics are seen as important foundations that make Bitcoin different from other cryptocurrencies.

Which crypto winter?

Although Bitcoin’s price is still down more than 65% from its all-time high, its hash rate and mining difficulty have largely ignored the crypto winter; both currently sit just shy of an all-time high.

Since May 2021, when China banned Bitcoin mining, the two metrics have risen almost continuously. Just a year and a half later, in November 2022, the network had recovered from the mass exodus of Chinese miners and regained previous levels. Even better, Bitcoin’s hash rate hit a new all-time high just this January, and like clockwork, its mining difficulty also hit a new all-time high just days later.

This increase in mining difficulty and hash rate is likely due to a handful of factors, but the most compelling explanation is related to the massive bull run Bitcoin went through in 2021. As miners collected their profits, they were able to scale up their operations. due to the increase in cash flow. In addition, the technology itself has come a long way. Newer, more capable computers are now coming online to mine Bitcoin. With more miners and stronger computers, the hash rate and mining difficulty increase.

Because of this continued growth in Bitcoin’s security and decentralization, an investment today is as alluring as ever. Never before has Bitcoin’s price fallen like it did in 2022 and the network has grown at the same time. Historically, an increase in hash rate and mining difficulty is seen as a bullish trend. While we’re still in the midst of a crypto winter, there’s reason to be optimistic about Bitcoin’s future. In preparation for that future, I am a buyer at today’s discounted prices.