Bitcoin miners were dealt another blow
as Monday’s mining difficulty adjustment is up a staggering 14% from the previous measure.
Despite declining Bitcoin prices throughout the year, the difficulty adjustment maintains its constant uptrend from the mid-2021 lows. According to BTC.com, Bitcoin mining difficulty reached an all-time high of 35.6 trillion hashes to mine one Bitcoin, following a period in which six blocks were solved in rapid succession.
Miners have been particularly hard-pressed by the crypto bear market, with mining revenue down 53% over the past year, according to CoinGecko, as the Bitcoin price has been unable to stay above $20,000 since an 11% drop on September 13.
Such an increase in difficulty implies that competitive miner pressure is increasing in tandem with increased network usage, despite the fact that BTC price action remains near two-year lows.
How Bitcoin Difficulty Works
Every 2,016 blocks, the Bitcoin code contains a difficulty adjustment approximately every two weeks. The direction and size of the adjustment are determined by the total computing power used to mine Bitcoin, with the goal is to keep block confirmations coming every 10 minutes.
According to BTC.com, the current Bitcoin network hash rate is 257 million terra hashes per second (TH/s), a significant increase from this time last year when it was roughly 140 million TH/s.
High Network Participation Despite Low Price
The Bitcoin network mining difficulty peaked at 25 trillion last year before plummeting to 14 trillion due to China’s crackdown on miners. When it did, the hash rate of some of China’s most significant Bitcoin mining pools dropped by up to 37%.
Since then, the difficulty has been steadily increasing in 2022, reaching 31 trillion in May before the market was rocked by the collapse of TerraUSD and its LUNA governance token.
Mark Morton, CEO of Scilling Digital Mining, an Irish Bitcoin mining company, remains optimistic about Bitcoin mining operations, adding his thoughts on the recent adjustment, stating, “The next difficulty adjustment suggests that miners are still finding sufficient profit margins to turn on new machines and are likely capitalizing on plummeting machine prices.”
Morton also noted that the increasing difficulty and hash rate are “very positive for the security of the Bitcoin network. We are witnessing network security skyrocket even despite the drawdown in Bitcoin price.”
In the Bitcoin whitepaper authored by Satoshi Nakamoto, the cryptographer explains why the difficulty increases as generated block generating speed increases, stating: “To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour.”
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