Slight Bitcoin difficulty increase expected, but Texas heat could impact hash rate

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Slight Bitcoin difficulty increase expected, but Texas heat could impact hash rate Slight Bitcoin difficulty increase expected, but Texas heat could impact hash rate James Van Straten · 25 mins ago

Insights Bitcoin

Hash rate recovers despite previous significant drop, averages 600 EH/s.

Quick Take

According to Newhedge data, Bitcoin’s difficulty is set to adjust tomorrow at around 9 am GMT on May 23, with a slight increase expected, just under 1%. This adjustment is significant as it follows the recent Bitcoin halving. The previous adjustment saw the largest difficulty drop since 2022 due to a decline in the hash rate, which fell approximately 12% from peak to trough.

However, the hash rate has been on a slight upward trend since early May, now averaging around 600 EH/s on a 7-day moving average, according to Glassnode.

Hash Rate Adjustment Percent Change: (Source: Glassnode)
Hash Rate Adjustment Percent Change: (Source: Glassnode)

The hash price is also rising, currently at about $56 per PH/s, though it remains considerably lower than the $100 per PH/s level seen before the halving, according to data from Luxor. Luxor’s Q1 report indicates that forward contract prices are trading in contango through October.

Bitcoin Hashprice Index: (Source: Luxor)
Bitcoin Hashprice Index: (Source: Luxor)

Despite this optimistic forecast, the hash rate often stagnates or drops during summer due to heat waves, particularly in Texas, where much of it is based.

3-month forwards Power Prices: (Source: Bloomberg, matthew_sigel)
3-month forwards Power Prices: (Source: Bloomberg, matthew_sigel)

This summer, electricity traders anticipate a significant spike in Texas power prices, a concern echoed by Matthew Sigel, head of digital assets research at VanEck, who suggests that the hash rate could face downward pressure.

Sigel says:

“3-month forwards are now over $200/MWh (20¢/kWh). As a result, some think the #bitcoin hash rate may be under pressure this summer & bottom in August/September after the Texas power peak”.

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