The Bitcoin network witnessed a significant rise in mining difficulty, setting a new all-time high by surpassing 72 trillion at block height 822,528.
The 6.98% increase from its previous level indicates an acceleration in mining operations around the globe, and the deployment of more powerful computing resources in the industry as miners prepare for the upcoming halving event.
The next difficulty adjustment is expected to occur on Jan. 5, 2024.
Increasing competition
The rise in mining difficulty coincides with an increase in the Bitcoin network’s hashrate, which surpassed 525 EH/s over a seven-day moving average. The current hashrate at block height 822,590 is approximately 631.85 EH/s, with a corresponding difficulty of 72.01 T.
The recent surge in Bitcoin’s mining difficulty and hashrate is a telling sign of the robustness and maturity of the Bitcoin network. It underscores the network’s resilience and its capability to attract significant investments in mining infrastructure, despite the market’s volatility.
However, this escalation also presents challenges for individual miners, who now face heightened competition and potentially lower rewards due to the increased difficulty. The increased difficulty could lead to reduced rewards for these miners due to the heightened computational power required to mine Bitcoin blocks.
Bitcoin Halving
These changes are occurring in the lead-up to the anticipated Bitcoin Halving, a key event in the Bitcoin ecosystem expected to take place in roughly four months.
The Halving, a process that reduces the reward for mining new blocks by half, is an integral part of Bitcoin’s deflationary mechanism, designed to control inflation and mimic the scarcity-driven appreciation akin to precious metals like gold.
Bitcoin’s mining difficulty is a measure of how challenging it is to find a new block compared to the easiest it can ever be. This difficulty is adjusted approximately every two weeks to maintain a constant block generation time of about 10 minutes. This adjustment depends on the total computational power in the Bitcoin network.
Higher mining costs, due to increased difficulty, can affect the supply of new bitcoins entering the market. This, in turn, could potentially influence Bitcoin’s price, making these metrics crucial indicators for investors and market analysts.