Recent on-chain data indicates that Bitcoin Difficulty is set for a 5% rise this coming Saturday, making BTC mining the most challenging it has ever been.
Bitcoin Difficulty Set to Increase Due to Hashrate Recovery
The term “Difficulty” denotes a metric that tracks how challenging it is for miners to extract blocks on the Bitcoin blockchain. The value of this indicator is adjusted approximately every two weeks during events referred to as network adjustments.
These adjustments occur automatically, governed by the original code implemented by Satoshi Nakamoto years ago. This functionality was integrated into BTC to ensure that miners maintain a consistent pace while completing their tasks.
As widely recognized, validators within the Bitcoin network utilize computational power to ‘mine’ blocks. Theoretically, increasing their power should result in faster mining rates.
However, the BTC network performs the opposite; it raises the Difficulty level whenever the total computational power, known as Hashrate, increases. The adjustment is calibrated to maintain the mining speed at approximately 10 minutes per block.
Likewise, if the validators are not mining blocks rapidly enough, the network can lower its Difficulty. This decrease is tweaked enough to facilitate mining at the same 10-minute rate per block.
The upcoming Difficulty adjustment for Bitcoin is set for tomorrow. Below is the data from CoinWarz outlining the expected changes during this adjustment.
It appears the metric's value is on the rise | Source: CoinWarz
The Bitcoin Difficulty is projected to increase by approximately 5.63% during this adjustment, attributed to miners achieving an average block time of 9.47 minutes.
This increase would elevate the Difficulty to 120.17 trillion hashes, surpassing the previous all-time high (ATH) of 114.16 trillion hashes set back in February.
Recent trends in BTC Difficulty over the months | Source: CoinWarz
The brisk activity among Bitcoin miners in recent weeks is, as expected, a result of an uptick in Hashrate. As illustrated in the chart below depicting the 7-day average value, miners recorded a new all-time high at the end of last month, before experiencing a slight decline back to earlier ATH levels.
Recent increases in Hashrate levels | Source: Blockchain.com
Miners derive a significant portion of their income from the block subsidy, receiving a fixed BTC reward for each block they mine. However, as the Difficulty adjusts to keep mining rates consistent, an increase in Hashrate does not expand their overall earnings.
As new computational power joins the network, the share of rewards for each miner decreases. Therefore, with the anticipated increase in Difficulty, miners may soon face challenges.
A decline in Hashrate may follow this adjustment, as some miners could be compelled to disconnect from the network. However, there remains a scenario where the increase could be sustainable if Bitcoin’s price rises over the coming days, enhancing miner revenue in USD terms. Time will tell how the cryptocurrency will perform.
BTC Price
As of this writing, Bitcoin is trading at approximately $83,300, reflecting a 1% decrease over the past week.
BTC price trend over the last five days | Source: BTCUSDT on TradingView
Featured image from Dall-E, Blockchain.com, CoinWarz.com, chart sourced from TradingView.com
Editorial Process for bitcoinist focuses on delivering well-researched, precise, and impartial content. We adhere to stringent sourcing protocols, and each article undergoes thorough review by our team of leading technology experts and experienced editors, ensuring the reliability, relevance, and value of our content for readers.
