Bitcoin mining is about to get a whole lot harder. A significant difficulty adjustment is coming.
Difficulty Adjustment Explained
The “difficulty” in Bitcoin mining refers to how hard it is for miners to solve complex mathematical problems to add new blocks to the blockchain. This difficulty adjusts roughly every two weeks to keep the average time to mine a block around 10 minutes. More miners (and more powerful mining equipment) means a higher difficulty. Fewer miners mean a lower difficulty.
A 5% Difficulty Spike
This Saturday, the Bitcoin difficulty is set to increase by approximately 5.63%. This would be an all-time high, surpassing the previous record set in February. The new difficulty will be around 120.17 trillion hashes. This increase is a direct response to the recent surge in miners’ computing power (hashrate).
What Does This Mean for Miners?
Miners earn Bitcoin as a reward for mining blocks. While a higher hashrate initially seems good, the difficulty adjustment counters this. The increased difficulty means that even with more computing power, the overall rate of block creation remains constant. This means each miner’s share of the Bitcoin reward gets smaller. The upcoming difficulty increase could lead to some miners shutting down their operations if they become unprofitable.
Will Bitcoin Price Save the Day?
The situation could improve if the price of Bitcoin increases. Higher Bitcoin prices would offset the reduced reward per block, making mining more profitable. However, it’s still uncertain how things will play out.
Current Bitcoin Price
At the time of writing, Bitcoin is trading around $83,300, slightly down from last week.
