Bitcoin mining difficulty records largest increase yet

Bitcoin is obtained by running complex program algorithms. In theory, anyone can create Bitcoin through software .

In fact, the competition for mining equipment is becoming increasingly fierce. It is very difficult to mine Bitcoin, and it requires extremely high computing power to barely mine it. The large-scale use of mining machines has made the difficulty of mining increase rapidly. The increase in difficulty has ensured the security of Bitcoin, but it has also made it extremely difficult to obtain new coins.

Algorithm Basics

The Bitcoin network is designed to measure how difficult it is to find a new block compared to the easiest way to do it. Every 2016 blocks a value is recalculated so that if everyone mined at this difficulty, the previous 2016 blocks would have been produced in two weeks.

As fewer machines compete to solve Bitcoin's hash function to earn newly created Bitcoins, the difficulty will drop; as more players get involved, the difficulty will rise. As more miners join in, the rate at which blocks are generated will rise. As the block generation rate rises, the difficulty will rise to compensate in order to drive the block generation rate down. Any blocks published by malicious miners that do not meet the required difficulty target will be rejected by everyone on the network and will therefore be worthless.

Market competition

Recently, Bitcoin mining difficulty saw its largest two-week increase in 12 months.

According to the data, at around 9:17 pm on July 9 , the mining difficulty at block height 584,640 reached 9.06 T , 14.23% higher than the previous record of 7.93 T. This is the strongest two-week growth since August 2018 - a sign that competition among miners is becoming more intense and they are constantly racing against time.

With such fierce competition now , the mining difficulty has directly crossed the entire range of 8 trillion and broke through the threshold of 9 trillion. The difficulty in the next adjustment period is likely to directly exceed 10T, and such an increase will exceed 14.17% . At that time, the difficulty of Bitcoin mining will undoubtedly become very huge.

Bitcoin mining difficulty

Likewise, the computing power devoted to securing the Bitcoin network has been calculated to have recorded the fastest increase in any two-week difficulty adjustment cycle since August 2018 .

As of July 5 , enthusiasm for Bitcoin mining has pushed the hash rate up to 74.5 quintillion hashes per second (EH/s) , which is in line with the forecasts of domestic mining farms. These mines have been running their machines constantly, especially in the summer rainy season when they can take advantage of cheap hydropower, but this is far from reaching the real limit. With the arrival of the rainy season in the southwest of the country, the total hash power is expected to continue to rise. It is estimated that the region's Bitcoin production will account for half of the world's mining production by then.

Technical limitations

Bitcoin mining difficulty was also hit hard during last year’s market downturn , falling 30% from October to December before returning to its previous highs last month.

Still, growth in Bitcoin’s hash rate and mining difficulty has not kept pace with Bitcoin’s price gains, at least not as fast as during the bull run in the second half of 2017.

According to the Bitcoin Price Index, the price of Bitcoin surged 400% from around $4,000 to nearly $20,000 between June and December 2017. During the same period, the network’s computing power grew by at least 200% .

However, while the price of Bitcoin surged to $12,000 in June, up 300% since falling to $ 3,000 earlier this year , the network hash rate has only increased 100% over the same period .

The reason for the lagging mining difficulty is that the supply of new Bitcoin mining equipment is insufficient to meet market demand. The main reason for this is that the miners' production capacity has encountered a bottleneck and the semiconductor suppliers have limited supply of chips, which makes the production of mining equipment fail to reach a certain level.