mining difficulty hits record high while network usage drops

If the Ethereum (ETH) blockchain sees its attendance decrease as a result of a general drop in cryptocurrency prices, mining is at record levels. As the Merge approaches, ecosystem players are taking advantage of the last few months where it is possible to accumulate ETH thanks to proof-of-work.

Mining on Ethereum breaks records

Saturday, June 4, the mining difficulty on the Ethereum blockchain reached a historic high. According to data from Etherscan, this difficulty rose to 15,089.793 terrahashes (TH).

The higher this value, the harder it becomes to mine a block on the network. Thus, this metric is a increasing function of the computing power deployed by all miners, in order to guarantee the stability of the blockchain.

Figure 1: The difficulty of mining on Ethereum

As shown in Figure 1, since the Chinese ban last summer, the difficulty of mining keeps increasing as new miners come to strengthen the network. Moreover, the computing power deployed by the latter has also reached a new record this Saturdayaccording to the CoinWars website.

Hashrate

Figure 2: Ethereum hashrate

The hashrate, as it is called, would thus have reached a maximum peak at 1.318 8 petahashes per second (PH/s). The conditional is used here, because Etherscan returns a daily average value of 1.08 PH/s and does not offer an intraday chart to compare the data.

Nevertheless, that does not detract from the fact that the month of May will have constituted a record for computing power deployed by miners on Ethereum, and that June seems confirm the trend.

👉 To go further – Find our guide on Ethereum (ETH)

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Network usage follows the decline

Ironically, while the competition between minors has never been so fierce, the network sees its attendance hitting yearly lows with 401,055 active addresses on June 4. It’s necessary go back to December 10, 2020with 381,124 active addresses, to find a lower value.

Active addresses

Figure 3: Active addresses on Ethereum

June 4th also sees a yearly low on the number of daily transactions, for a total of 1,029,121. Like the number of active addresses, Figure 4 shows us that we also have to go back to the end of 2020 to find lower values. Namely November 29, 2020 for 993,930 transactions.

Daily transactions

Figure 4: Number of daily transactions

This downtrend in Ethereum blockchain solicitation benefits these users. Indeed, the price of transactions has been particularly low in recent months, compared to what could be seen in the heart of the bull run.

Average transaction price

Figure 5: Average price of a transaction

On May 28, the average price of a transaction was $3.73, a low since July 11, 2021 which recorded $2.43.

The statistical aberration visible in Figure 5, bringing a daily average to $200.06 on May 1, corresponds to the sale of land in Otherside, Yuga Labs’ metaverse.

The upcoming arrival of the Merge

The decrease in network traffic is not exclusive to Ethereum. Rather, it follows a general trend, due to the fall in prices themselves, making shun investors.

Like other cryptocurrencies, ETH is currently working a hinge zone, which was also defended around this time last year. This area is around $1,800.

ETH course

Figure 6: ETH price

An idea popular in the ecosystem describes that the price of ETH could rebound as Ethereum transitions to proof-of-stake (PoS) consensus: the merge.

This idea is defended by a upcoming drastic drop in rewards assigned to each block generation. Coupled with the burn mechanism, implemented last August with EIP-1559 integrationthis historic change would be the equivalent of three halvings on the Bitcoin (BTC) network in terms of inflation reduction.

ETH burned

Figure 7: Number of ETH burned since the implementation of EIP-1559

Whereas 2.4 million ETH have already been burnedthe scarcity of the asset will tend to decrease further, provided that the change in consensus goes well.

We can then understand Ethereum’s recent mining records. Minors benefit from last months when it is still possible to accumulate ETH by proof-of-work (PoW), before this activity stop.

However, there is no guarantee that the Merge will drive up prices. First, it will depend on overall ecosystem healthbut also keep in mind that 10% of all ETH in the network will return to circulation.

The staking contract for Ethereum, 2.0 implemented on November 3, 2020, indeed counts nearly 12.8 million ETH. These will be released some time after final settings, once the switch to proof-of-stake has taken place. Investors may therefore choose to take profitthus driving the price down.

👉 Also in the News – New York Senate Passes Moratorium on Cryptocurrency Mining

Sources: Etherscan, CoinWarz, TradingView, Beacon Chain contract

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