Mining difficulty on BTC network hits record high

Getting your Trinity Audio player ready...

Following the new year’s first adjustment, network difficulty on BTC reached a new record high over the weekend, as the price of BTC also hovered near its record all-time levels.

Mining difficulty is a relative measure of the competitiveness for discovering blocks on the BTC network. It rises or falls based on the amount of computing power consumed by the network. According to public data aggregated by Blockchain.com, starting at block 665,280, difficulty rose to 20.607 trillion, making it harder than ever to generate new blocks. This milestone is also notable because it marks the first time in history that the BTC network exceeded the 20 trillion level.

For long-term observers of the industry, the events are not surprising, echoing the behavior currently seen in the financial markets plagued by market manipulation.

This significant adjustment is in line with the BTC price surge that started last October, making block reward mining more lucrative for participants using both next-generation and older ASIC miners. For many, mining revenue has tripled in recent months. The adjustment correlates with the new all-time high in the overall BTC network hash rate of 151.089 TH/s.

The adjustment occurs every 2016 blocks, or approximately 14 days, to ensure that the time taken to mine a block remains 10 minutes on average. The current mining enthusiasm might dampen a bit following this week’s BTC sell-off and pullback, which saw prices finally dip. Historically, many times BTC price falls by thousands of dollars; mining difficulty corrects itself. 

However, there is another force driving the uptick in the current BTC hash rate. Thanks to questionable financing schemes, larger block reward mining companies have been able to bulk order and deploy new high-performance next generation ASIC hardware to mine at a larger scale than ever before.

Based on this ongoing spending frenzy, BTC’s hash rate is likely to remain higher than overall 2020 levels throughout all of 2021. It obscures the fact that retail miners, hobbyists, and small-scale firms are conceding the hash power battle to the larger mining corporations. 

See also: TAAL’s Jerry Chan presentation at CoinGeek Live, The Shift from Bitcoin “Miners” to “Transaction Processors”