Recently, the creator of the Bitcoin Stock-to-Flow (S2F) model, known by the X username “PlanB,” shared insights into Bitcoin’s surging mining hash rate, arguing the involvement of significant asset managers like BlackRock.
According to PlanB, financial institutions seeking Bitcoin exchange-traded funds (ETFs), such as BlackRock, are adopting a front-loading acquisition strategy. He claimed these institutional investors opt to accumulate BTC indirectly through miners instead of purchasing the crypto directly on exchanges.
PlanB argued that acquiring Bitcoin directly on exchanges could significantly impact its price. On the other hand, he noted that buying it indirectly from miners affects the mining hash rate more than the price. According to PlanB, this could explain the recent Bitcoin network hash rate surge.
IMO ETFs like BlackRock are currently front-loading BTC … through miners instead of exchanges. Buying BTC directly on exchanges would impact price too much. Buying indirectly from miners would impact hashrate but not so much price. Might explain current hashrate explosion. https://t.co/TjiRsEenta
— PlanB (@100trillionUSD) November 27, 2023
Meanwhile, Dan Held, a former growth marketing director at the Kraken exchange, challenged PlanB’s perspective about the price impact of BTC acquisition via miners compared to exchanges.
Held argued that all trades, whether over-the-counter (OTC) or otherwise, inevitably impact the price. Held emphasized that the total amount of bought or sold coins remains identical, regardless of the trading counterparties involved.
While acknowledging the validity of Held’s view, PlanB introduced additional considerations. He suggested that the difference between ETFs buying OTC from miners and miners selling OTC to ETFs is that the former removes demand from the market while the latter removes supply.
Over the weekend, the Bitcoin network underwent a significant adjustment in the difficulty level for mining a new block. According to data from the Bitcoin Blockchain Explorer, this adjustment occurred at block height 818,496, propelling the mining difficulty to a record high of 67.96 tera-hashes per second.
The mining difficulty surge follows the network hash rate rise, as the average hash rate clocked at 504.8 exa-hashes per second (EH/s) compared to 486.50 EH/s recorded in the previous mining difficulty adjustment.
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