Data from the chain shows that Bitcoin difficulty increased for the third time in a row during the latest network adjustment. Here’s what this means for BTC.
Bitcoin difficulty just hit a new all-time high
According to data from CoinWarzBTC difficulty has seen a positive change during the last network adjustment. The “DifficultyHere is a metric that tracks how difficult the Bitcoin miners would find it to mine on the network.
The value of this indicator is refreshed every few weeks, without human intervention; the code Satoshi wrote automatically makes the adjustments.
The last such adjustment occurred last day and resulted in the difficulty of moving up. Below is a chart showing how the value of this metric has changed in recent months.
The value of the metric appears to have seen a sharp surge recently | Source: CoinWarz
The chart shows that Bitcoin difficulty also jumped during the previous two adjustments, but this latest increase of over 6% is the largest of the three.
As for why the chain has increased its difficulty lately, the reason lies in the trend that the Hashrate has observed. The “Hashraat‘ is a measure of the total amount of computing power that the miners as a whole have connected to the Bitcoin blockchain.
Here’s a graph of it Blockchain.com which shows the trend in the 7-day average value of this BTC indicator over the past year:
Looks like the value of the indicator has been following an uptrend in recent weeks | Source: Blockchain.com
The chart shows that the seven-day average Bitcoin hashrate has been rising for a while, reaching new all-time highs (ATHs). The upward trend has been particularly sharp in recent weeks, indicating that miners have become more aggressive with their expansion.
What is the relevance of this for the difficulty level? Well, one of the core features of the network is that the block time remains consistent around 10 minutes.
Whenever miners add power, they become faster at their task and produce blocks faster than this standard. To counter this speed increase, the network makes it harder for miners to complete their tasks, pushing them back to 10 minutes per block.
The cryptocurrency’s Hashrate has recently seen an explosion, so the chain has only responded as designed by appropriately increasing the difficulty to a new all-time high.
But why did the creator of BTC add this restriction in the first place? The block subsidiesthat serves as the sole means to produce more BTC can be limited by limiting how quickly miners can move through blocks and earn these rewards.
The supply of the asset is constantly growing, but at least the existence of the Difficulty means that inflation only occurs at a predictable rate.
BTC price
Bitcoin fell below $67,000 yesterday, but the value quickly recovered as the price recovered to $69,700.
The price of the coin seems to have surged over the last 24 hours | Source: BTCUSDT on TradingView
Featured image from Dall-E, Blockchain.com, chart from TradingView.com