Bitcoin mining activity is experiencing a surge, and the level of difficulty has reached historical highs. What is behind this trend, and how will it affect the future of the cryptocurrency and its miners?
Bitcoin mining, the process of verifying transactions and adding them to the cryptocurrency’s main ledger, has recently become exceptionally intense. Recently, the difficulty level of this process has increased by 6.47%, posing an even greater challenge for miners in discovering new blocks.
The level of mining difficulty reflects the number of attempts required (known as hashes) to find a new block. Currently, this value stands at 61.03 trillion. This is the third consecutive increase in mining difficulty, which has nearly doubled since last October.
Moreover, it’s worth noting that the Bitcoin mining difficulty level is adjusted every 2,016 blocks, or roughly every two weeks. This is the network’s response to the time it takes miners to find a new block – whether it’s faster or slower than the assumed 10 minutes per block.
If blocks are mined too quickly, the difficulty increases. If the process takes longer than 10 minutes, the difficulty is reduced. An increase in the level of difficulty means that miners must utilize more computational power to successfully mine a block. It also indicates a growing number of miners joining the network, as mining becomes more computationally advanced.
There are several factors that can influence this trend. One of the main ones is the upcoming Bitcoin “halving,” which will occur in about 6.5 months. As a result, many miners are trying to maximize their current situation before this critical moment.
Many experts, such as Jeff Mei, COO of crypto exchange BTSE, and Mauricio Di Bartolomeo, co-founder and CSO of Ledn, believe that the upcoming Bitcoin halving will be significant for miners. They expect an increase in the number of miners joining the network before this event, and after it occurs, due to reduced profits, this pace may decrease.
There are also several other reasons why miners might be increasing their activity. These could be concerns related to expectations of rising energy prices, which would affect their profitability.
The rising difficulty level in Bitcoin mining points to dynamic changes in the ecosystem of this cryptocurrency. Miners, investors, and observers will certainly be closely monitoring the developments in the coming months.
Photo by Dmytro Demidko on Unsplash
