Talking about the relationship between Bitcoin computing power and currency price from the perspective of Bitcoin mining

After a continuous decline for nearly half a year, the difficulty of Bitcoin mining has risen by 10% in recent times, and there is a trend of continued upward adjustment. There has always been a saying in the industry that the change in computing power has an important reference value for the trend of Bitcoin. So, what is the relationship between Bitcoin computing power and currency price? First of all, we need to analyze what causes the change in computing power. Simply put, the increase in computing power means that there are more Bitcoin mining machines involved in mining, and the factors that affect Bitcoin computing power are as follows.

Bitcoin mining machine price
In the second half of last year, the price of Bitcoin mining machines dropped significantly. Some mainstream mining machine manufacturers also offered some concessions based on the market conditions. For example, the price adjustments of Antminer, Avalon Miner and Shenma Miner all exceeded 50%.
On mining machine websites such as RHY Miner Mall, the price of second-hand Antminer S9 is currently around 800-900 yuan, and the price of new mining machines on the official website is 1510 yuan. Avalon's 7nm series products A921 and A920, with a maximum computing power of 20T, have the latest official price of only around 1500 yuan in January 2019 and are currently sold out.
This shows that although the price of Bitcoin is falling, as the cost of mining machines decreases, many miners are still willing to "buy at the bottom" and stock up on machines, and the mining machine market has not shrunk. The recent surge in the price of coins has also made these miners who made early arrangements to buy mining machines at the bottom earn a lot of money.
Bitcoin mining machine research and development progress
With the rapid iteration of mining machine technology, major manufacturers are competing to launch high-computing, low-power mining machine products. At the end of July last year, Avalon launched the A921 mining machine equipped with a 7nm chip. In August, Antminer released the S9 Hydro water-cooled mining machine. In September, Shenma Miner also followed suit and released the M10 mining machine equipped with a 16nm chip. Many experts said that the competition among mining machine manufacturers has entered a white-hot stage.
The increasingly fast iteration speed has led to an increase in the overall shipments of the mining machine industry. The predicament of insufficient shipments is now very rare. A large number of new mining machines support the huge computing power of the mining farms. In addition, a consensus in the mining circle is that the mining industry is being reshuffled, and Bitcoin mining is becoming more and more large-scale. After all, large mining farms and large miners with strong capital and power resources can get relatively favorable low electricity charges, and the power supply is stable.
In response to this, many miners choose overseas mines with low electricity costs to deploy mining. Because domestic electricity resources are limited during the flood season, many domestic mines often have power outages and power restrictions, which makes many miners miserable. Therefore, stable low-electricity mines have become the favorites of miners in the bull market. With the stable supply of electricity as low as 0.19 yuan per kilowatt-hour, RHY mines have also become the choice of more and more domestic miners to shift their mining layout. Domestic Sichuan mines and Northwest mines have very limited machine positions and electricity during the flood season, and the mining machines in the hands of miners are very passive. Therefore, a low-electricity mine with stable power supply and no power outages is very urgently needed by miners in the bull market.
The relationship between computing power and coin price
According to the difficulty adjustment setting of Bitcoin, the number of Bitcoins mined in a fixed time period is generally stable, and the increase in computing power will not affect the output of Bitcoin, nor will it affect the recovery of Bitcoin prices. Simply put, "computing power will not affect the price of the currency, but the price of the currency will affect the computing power", because when the price of the currency rises, the profit of miners will increase, and they will buy more mining machines. The more new mining machines have high computing power, the more they are, which will lead to an increase in the overall computing power of Bitcoin.
On the other hand, more than 80% of the total 21 million bitcoins have been mined. The third halving will be carried out around April 2020, when only 6.25 bitcoins will be produced in each new block. Bitcoin is becoming increasingly scarce, but the operation of the Bitcoin network has always required miners to maintain it. If the price of the currency falls below the psychological price of miners, miners will not have a reasonable return on investment, which will affect the normal operation of the network. From this perspective, although there is no direct correlation between the price of the currency and the computing power, only when the price of the currency is maintained within an expected range can the industry develop healthily.
Therefore, in the logical relationship between computing power and coin price, price is the cause and computing power is the result. The increase in coin price amplifies mining profits, attracts capital to enter, causes computing power to increase, and then affects the mining costs of miners and market competition.