In brief
- Bitcoin’s mining difficulty has risen almost 30% since the start of the year to a new all-time high of 142.3 trillion.
- Rising mining difficulty indicates that mining is becoming more computationally intensive.
- The difficulty increase can be offset by improved efficiencies in new generations of mining equipment, as well as sustained price highs.
Bitcoin’s mining difficulty has hit a new all-time high of 142.3 trillion, marking a 29.6% increase since the beginning of the year.
Mining difficulty is an average measure of how many hash functions miners need to calculate to mine one block, with a rising figure indicating that mining is becoming more computationally intensive.
Difficulty is recalibrated every 2,0116 blocks in order to ensure a ten-minute block time, adapting to any increases (or decreases) in the Bitcoin network’s hash power.
Accordingly, Bitcoin’s hashrate has also set a new record high, moving to 1.09 ZH/s, or 1,090,000,000,000,000,000 hashes.
The latest milestone comes just a week after Bitcoin’s mining difficulty shot to a record high of 136.04 trillion.
These peaks are taken as a hugely positive sign as far as the health of Bitcoin and its network is concerned, with CJ Burnett, chief revenue officer at Compass Mining, telling Decrypt that difficulty adjustment is one of Bitcoin’s “most elegant and underappreciated” features.
“It allows the network to recalibrate itself, almost making it akin to a living organism that self-regulates,” he said.
A competitive mining sector
For Burnett, a rising difficulty measure is a sign of a healthy and competitive mining sector.
Like the Bitcoin halving, he said, rising difficulty “often forces less efficient miners to go offline, while professionalized miners with strong infrastructure and low-cost energy can thrive.”
While there are often concerns that rising difficulty can make mining less cost-effective for some firms, a high and rising Bitcoin price usually offsets any increase in operating costs, experts argued.
Digiconomist founder Alex de Vries told Decrypt that improvements in hardware efficiency can weaken any correlation between difficulty and electricity consumption, thereby keeping costs down for miners.
“As new generations of mining equipment come online, the amount of electricity consumed per unit of computation goes down,” he explained. “This means there is only an indirect relationship between hashrate and electricity consumption, and technically it’s possible for hashrate to keep rising while overall electricity consumption remains constant.”
Miners remain online—prices permitting
As such, the increase in Bitcoin’s difficulty may not result in professional miners going offline anytime soon, especially if Bitcoin’s price continues to set new record highs, as it did last month.
“There is a more direct relationship between mining revenues and electricity consumption, as increasing revenues will enable miners to spend more on electricity regardless of equipment efficiency (higher efficiency just means they can run more machines on the same budget),” added de Vries.
More generally, the increase in difficulty is a sign of how strong and secure the Bitcoin network is, and of how increasingly difficult it would be to pull off a dreaded 51% attack, as attempted on the Monero network last month.
“There’s a very strong correlation between hash power and mining difficulty,” said Burnett. “As they both grow, the network becomes more secure and harder to attack.”
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Source: https://decrypt.co/340459/bitcoin-difficulty-hits-another-all-time-high-what-means-miners
