Bitcoin Mining Difficulty Hits Record Highs; Here’s what that means

While under increased regulatory pressure, the cryptocurrency industry continues to grow and attract newcomers who recognize the opportunity to create income through cryptocurrency mining, with their computing power, along with that of the miners of long-standing Bitcoin (BTC), which recently hit a new all-time high (ATH).

Indeed, falling energy costs, new and better mining machines, as well as modest price hikes have all contributed to a surge in computing power stirred by Bitcoin miners, which hit a record high on May 31, according to the 1 report. June by Bloomberg e BTC. com data retrieved June 2.

Bitcoin mining difficulty. Source: BTC. com

Specifically, this figure stood at 51,234,338,863,442 or approximately 51.23 trillion as of the end of May, with an average daily hashrate of 422.24 EH/s. Meanwhile, the platform expects the next estimated difficulty to total 51.29 trillion, demonstrating a 0.10% increase.

Why is the mining difficulty increasing?

As the Bloomberg article pointed out, the bi-weekly update recorded a 3.4% increase after another 3.22% jump during the last period, indicating that mining difficulty has increased with only two slight decreases in quests. ‘year.

According to the article, a steady rebound in the digital asset this year, (…) a drop in electricity costs and a new wave of more efficient machines have all pushed the new ATH into Bitcoin mining difficulty. Like Wolfie Zhao, head of research A The MinerMaja research arm of the cryptocurrency mining consultancy BlocksBridgehas explained:

Bitcoin miners are enjoying cheaper electricity before heading into summer. (…) Newer, more efficient machines also generate more computing power with the same amount of energy.

Measured on a scale from zero to infinity, mining difficulty refers to the level of difficulty miners have in verifying transactions, grouping them into blocks, and adding them to the blockchain. It increases and decreases based on the number of miners competing on the network and corrects every 2,016 blocks.

Typically, miners aim to find a new block every 10 minutes, and mining difficulty increases when miners validate new blocks more often than the 10-minute average, while it decreases when they find new blocks less frequently.

Skyrocketing hashrate

At the same time, the more miners on a network compete for the correct hash, the higher the hashrate, and Bitcoin’s hashrate has also grown, indicating an increasing number of miners on a network since cryptocurrency mining was banned in place. by the government of China in 2021.

Indeed, the hashrate of decentralized finance (DeFi)’s flagship asset recently soared to 350 million terrahash per second (TH/s), compared to around 75 million in late 2021, to which it had sharply declined shortly thereafter. the ban, according to the graph shared Of Bitcoin magazine on June 1st.

Bitcoin hash rate. Source: Bitcoin magazine

Bitcoin price analysis

As it stands, Bitcoin is currently changing hands at a price of $27,085, up 0.77% in the past 24 hours and 2.43% in the previous seven days, while recording a decline of 5.52% in the last month, according to the most recent charts, retrieved from Finbold on June 2, indicate.

Bitcoin price chart. Source: Finbold

As Bitcoin’s next halving event, which will halve the reward for mining new blocks, approaches, more miners will likely join the effort, while current ones will step it up as they try to cash in as much as possible before it happens. At the same time, experts predict that the event will also trigger bullish price action for the top cryptocurrency.

Disclaimer: The content of this site should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.

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