Bitcoin mining difficulty – a measure of how hard it is to compete
for mining rewards on the world’s first blockchain network – has posted
its largest two-week increase in 12 months.
According to BTC.com
data, mining difficulty reached 9.06 trillion (T) at block height
584,640 around 9:17 UTC on July 9, surpassing the previous record of
7.93 T by 14.23 percent. This was the strongest growth in any two-week
period since August 2018 – a sign that competition among miners is not
only intensifying but doing so at an accelerated rate.
The bitcoin network is designed to adjust its mining difficulty every
2,016 blocks (roughly 14 days) based on the participating mining power
in each cycle, in order to ensure the block-producing time at the next
period stays at about every 10 minutes.
When there are fewer machines competing to solve bitcoin’s hash
function to earn newly created bitcoin, the difficulty will fall; when
more players jump in, it rises.
Competition right now is so fierce, mining difficulty has leapfrogged
the entire range of eight trillion to break the threshold of nine
trillion. The estimated difficulty by BTC.com at the next adjustment
period could be as high as 10.35 T, which would be another 14.17 percent
increase.
Similarly, the amount of computing power devoted to securing the
bitcoin network has also logged the biggest growth of any two-week
difficulty adjustment cycle since August 2018, based on BTC.com data and
CoinDesk’s calculations.
Enthusiasm for bitcoin mining has pushed the hash rate to as high as 74.5 quintillion hashes per second (EH/s) as of July 5, in
line with predictions by mining farms in China that have been plugging
in machines to take advantage of cheap hydroelectric power during the
rainy summer season.
The total hashing power is expected to continue rising as the peak
rainy season is still months away in southwestern China, an area that is
estimated to account for half of bitcoin’s global mining production.
Boom and bust
Bitcoin mining difficulty took a significant hit last year amid the
market downturn. It dropped as much as 30 percent from October to
December and only got back to the previous high last month.
That said, the increases in bitcoin’s hash rate and mining difficulty
have not yet caught up with the pace of bitcoin’s price jump, at least
not as much as they did in the bull run during the second half of 2017.
According to CoinDesk’s Bitcoin Price Index data,
bitcoin’s price surged by 400 percent 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 percent.
However, while bitcoin’s price has shot up to as much as $12,000 in
June – a 300-percent jump since it fell to $3,000 early this year – the
network hash rate has only increased by 100 percent over the same
period.
The reason for this lag is an insufficient supply
of new bitcoin mining equipment to meet the market’s demand since major
miner makers are hitting a bottleneck of production capacity resulting
from a limited supply of chips from semiconductor vendors.
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