| By Peter Chawaga
On Tuesday, the Bitcoin network mining difficulty spiked by 14.95 percent, the largest such jump Bitcoin has seen since the beginning of 2018. According to data from BTC.com, the jump took place at block 635,040, reaching a difficulty of 15.78 trillion — its fourth-highest level in history.
What Is Mining Difficulty?
Bitcoin mining difficulty is the measure of how hard it will be for miners to find a hash. By design, the Bitcoin network seeks to maintain consistent block times of 10 minutes. The mining difficulty is programmatically adjusted every 2,016 blocks (approximately every two weeks) so that it’s as likely as possible that a miner will successfully add a block to the blockchain once every 10 minutes.
Read more about mining fundamentals in our Bitcoin Mining Guide.
The difficulty adjustment is based on how much hash power is active on the network — as more miners participate with more hash power, mining becomes more difficult so that this 10 minute interval is maintained. This recent spike in mining difficulty indicates that mining has become relatively competitive, despite the recent Halving and significant reduction in the subsidy that miners receive for their efforts.
Why Did Mining Difficulty Spike?
Significant mining difficult drops of 9.29 percent and then 6 percent in mid-May and early June, respectively, likely encouraged miners around the world to begin turning their machines back on after potentially shutting them off post-Halving. Simultaneously, new-gen mining hardware with better efficiency has been reportedly coming online in the last few weeks.
(Side note: On Tuesday, BitMEX Research released a comprehensive report on the market share of the industry’s leading ASIC manufacturers. Check it out.)
If this higher difficulty is maintained in future adjustments, it may signal the end for some older hardware that was being effectively run up until this point.
“[Large mining farms are] essentially getting ready for a replacement of the hardware. So they usually place their orders already and they’re just waiting for the shipments,” explained Jan Čapek, the co-founder of bitcoin mining firmware producer Braiins, during the Bitcoin Magazine BitcoinHalving.com live stream in May. “Once these miners are installed, then what could happen to you would ... [be] a rise in difficulty that would obsolete the old hardware even faster.” | 