Data shows that bitcoin mining difficulty has recently seen its fifth consecutive increase as the hashrate has continued to rise.
bitcoin mining difficulty has increased by 3.55% in the latest adjustment
“Mining difficulty” refers to a feature of the bitcoin blockchain that controls how difficult it would be for miners to mine on the network. For example, miners have to work harder to solve the next block when its value increases.
Now, why does this feature exist? The reason is that Satoshi wanted btc block rewards (the rewards miners receive as compensation for solving blocks) to be delivered at a constant rate, regardless of network conditions.
Block rewards serve as the only way to generate new cryptocurrency tokens. When miners increase their computing power (the “hashrate”), they naturally become faster at mining and produce blocks faster.
Miners then start receiving rewards faster, so the supply of the asset also starts to grow at an accelerated rate. This can be worrying for the asset as its value can be affected by inflation.
Satoshi had already foreseen such a problem, so the anonymous creator had chosen to keep the block rewards constant so that currency inflation would remain controlled.
Every time miners increase their hash rate, the blockchain increases the difficulty at the next scheduled adjustment (approximately every two weeks). With increasing difficulty, miners slow down to standard speed.
Now, here’s a chart showing how bitcoin mining difficulty has changed over the past year:
<img decoding="async" class="alignnone wp-image-264369 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Bitcoin-Difficulty-Sees-Fifth-Consecutive-Rise-What-It-Means.png" alt="bitcoin Mining Difficulty” width=”980″ height=”352″ srcset=”https://bitcoinist.com/wp-content/uploads/2023/11/chart-2.png?w=1086 1086w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-2.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-2.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-2.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-2.png?w=750 750w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
The value of the metric has been going up in recent days | Source: bitcoin/difficulty-chart" target="_blank" rel="noopener nofollow">CoinWarz
bitcoin mining difficulty has increased by approximately 3.55% in its latest difficulty adjustment, setting a new all-time high. As can be seen from the graph, this increase in the metric is the fifth consecutive increase observed by the network.
This year there was only one other case with five consecutive adjustments. So another now would mean the record would be broken by 2023.
The reason the difficulty has increased so relentlessly recently is that the mining hashrate has also shown unstoppable growth as it has continued to set new all-time highs. The chart below shows the trend of the 7-day average value of this bitcoin indicator over the past year.
<img loading="lazy" decoding="async" class="alignnone wp-image-264372 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/1699910281_971_Bitcoin-Difficulty-Sees-Fifth-Consecutive-Rise-What-It-Means.png" alt="bitcoin Hashrate” width=”980″ height=”412″ srcset=”https://bitcoinist.com/wp-content/uploads/2023/11/chart-3.png?w=1386 1386w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-3.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-3.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-3.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-3.png?w=750 750w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-3.png?w=1140 1140w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
Looks like the metric has been growing sharply recently | Source: Blockchain.com
New miners have been arriving on the network and old ones have recently expanded, possibly in anticipation of a bull market for the cryptocurrency.
Since block rewards remain almost fixed, the only variable in miners’ income is the price of the asset. Rallies therefore mean higher income for these chain validators, so they are incentivized to expand in preparation for them.
btc Price
At the time of writing, bitcoin is trading at around $36,800, up 5% over the past week.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/p7kP5Mgl/" alt="bitcoin price chart” width=”1534″ height=”869″/>
btc has registered a sharp uptrend in the past month | Source: BTCUSD on TradingView
Featured image by Brian Wangenheim on Unsplash.com, TradingView.com charts, Blockchain.com, CoinWarz.com
