Bitrabo Editorial
Data from the blockchain shows that Bitcoin mining difficulty has decreased by more than 4% in the most recent network adjustment.
Overview of Bitcoin Mining Difficulty Changes
The mining difficulty metric measures the challenge miners face in creating new blocks on the Bitcoin network. This value undergoes an automatic adjustment approximately every two weeks.
Understanding the purpose of the mining difficulty is crucial to interpreting whether a change is positive or negative. Essentially, the difficulty serves as a tool to regulate the inflation of the asset.
In the case of Bitcoin, the only way to increase the supply is through mining new blocks and earning a block subsidy in return. Since the block subsidy is fixed, the rate at which miners hash new blocks is the variable affecting the currency’s supply growth.
To control inflation, it is essential to limit this rate. Satoshi Nakamoto, the creator of Bitcoin, introduced the difficulty adjustment to address this issue.
As miners increase their total computing power (hashrate), they can mine blocks faster and receive subsidies at an accelerated pace. However, the network adjusts the difficulty to slow down miners to maintain the target block time of ten minutes.
When miners experience a decrease in hashrate, the difficulty decreases as well, allowing miners to continue processing blocks at the usual rate despite lower computing power.
The recent adjustment reflects a decline in mining difficulty by over 4%, likely to counteract a previous sharp increase indicating that miners were becoming notably faster.
The 7-day average mining hashrate also peaked at a new all-time high before the difficulty spike, further supporting this observation.
With the difficulty readjusting negatively, some miners may see improved conditions compared to the pressure they faced during the high difficulty period.
Bitcoin Price
Currently, Bitcoin is trading around $58,500, showing a decrease of more than 2% in the past week.