The next difficulty adjustment for Bitcoin is expected to be at least +15%, meaning that the miners that turned on their machines, will once again shut them off. It is expected that the difficulty will be adjusted this Tuesday on block 635040.
Bitmain is in a civil war right now, with an inside battle for power escalating after Micree Zhan physically took over the Beijing headquarters and yesterday an ASIC factory in Shenzhen, China, suspending the already delayed deliveries of new ASICs to Bitmain clients.
Moreover, the price of Bitcoin dipped 10% yesterday and stabilized at around 9400 with a negative outlook.
Economies look like they will enter at least a 2-3 year phase of negative GDP and a prolonged recession. I hope I'm wrong on this but I can't see any basis on the estimates of a "V" shaped recovery in the economy.
These facts can be of grave concern and perhaps will affect Bitcoin for many months.
Bitcoin's hash rate is looking for the first time to be weakening. Of course, this might not mean that the network will become insecure and prone to 51% attacks, but it will mean that miners will turn on their machines every time hash rate drops, mine blocks easier (cheaper) and price will follow the production cost.
Of course, more than 60% of the production is happening in China where the miners have negotiated very favorable contracts with power suppliers and some have even created their own dams in order to produce cheap electricity for their operations.
The reduced power cost is countering the effects of the halving. The Bitcoin fees have dropped lately and since the price has also dropped it can be another fact added to all the above that might produce a difficult situation for Bitcoin.
As I've written before, while major funds are trying to find a safe harbor they still don't consider Bitcoin being one. Billionaires don't like waking up millionaires, so they won't buy an asset because crypto twitter thinks this way.
I don't know though. Perhaps Tether will print another trillion BTC to sustain 9k for a few more months. Perhaps they still think that the stock to flow model is working and somehow people will buy Bitcoin at $100,000 for some unknown reasons. Or perhaps they still think that hyperinflation levels of Zibambue are right around the corner, while in fact, it is deflation that hits economies during a recession. Seriously I think that crypto twitter is just dumping to the clueless people that are buying right now.
*I have hopes for Bitcoin and cryptocurrencies and I am waiting for a new wave of adoption. I just don't share the crypto twitter's desperation to push Bitcoin as something it is not. It is obvious that these people are just shills posting random unverified data without thinking. I believe that Bitcoin right now might make a new ATH but it won't go to 100,000 until the end of 2021 as the stock-to-flow model suggests. A simple mathematical equation is not a model. There are countless variants that are not accounted for.
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” - The Big Short (2015)
*[Edit]: Added this paragraph a day later.
Originally posted on read.cash. I also published this article on Uptrennd.