As current market projections show, bitcoin mining difficulty is approaching its 50 trillion hashes level after it recently surged to an all-time high of 49.55 trillion. This increase indicates that one Bitcoin block is now almost 50 times harder to spot than when the token appeared when miners only needed to build one hash to spot the winning block.
While the increased difficulty of adding cryptocurrency to the blockchain is upsetting for miners, it can also indicate long-term health and stability for the network as the number of individuals entering it grows. Mining Bitcoin is starting to appeal to more tech-savvy crypto enthusiasts, as the market shows signs of recovery and Bitcoin is on the right path. As more investors look to buy Bitcoin with debit card or other purchasing methods to store it in the long term or invest in it, miners and newcomers start powering their gigs to join the network.
A new difficulty level is expected to be reached in the following days. However, these adjustments are meant to keep the network running efficiently in the long term.
So, why is mining Bitcoin becoming more challenging, and what should we expect in the upcoming period?
What is Bitcoin mining difficulty?
Before unveiling where the difficulty of Bitcoin mining will be in the upcoming period, we should first understand what the whole process implies. As the name suggests, bitcoin mining difficulty refers to the level of difficulty that creating fresh blocks through mining involves. The blockchain requires this process in order to issue new coins and employs an algorithm that controls how challenging mining new blocks is.
Miners need to solve complex cryptographic puzzles known as Proof-of-Work (PoW) to create new coins and secure the network. As they progress in their work, the network’s algorithm changes the rate to enable miners to find valid hashes. This measure is needed to reduce or boost the degree of difficulty in the mining process.
As reports show, the number of participants in the mining realm has grown significantly over time, which automatically led to the rising difficulty level we’re witnessing today. This comes as a consequence of Bitcoin’s rising popularity and multiple use cases over time, which are among the main propellers of the expanding number of Bitcoin miners. The larger this crowd grows, the more computational resources are needed, and the higher the competition to win the limited block rewards becomes. Therefore, the network must expand its hash power to manage the rate at which blocks are discovered.
This impacts the time in which a block is successfully mined. At the moment, a new block is attached to the blockchain every ten minutes.
The level of difficulty will keep changing once every two weeks
The degree of difficulty in mining Bitcoin adjusts approximately once every two weeks as the system adapts to the continuing changes in the hash rate. The measure is meant to secure the network’s ability to process new blocks in the needed amount of time of 10 minutes without being impacted in time, as maintaining a 10-minute interval to find fresh blocks is a measure that secures the stability of the network. To support this frequency, the algorithm plays with the difficulty of mining new coins, and the level grows together with the influx of mining rigs and miners. On the other hand, when there’s a drop in the number of devices and miners in the mining process, the algorithm lowers the barrier to enable the remaining participants to find new blocks. This feature is modified by adding or cutting zeros from the target hash.
Bitcoin’s halving may decrease the number of miners
Bitcoin’s halving last year may force some miners to shut down their operations. Historically, when the block rewards were cut from 12.5 BTC to 6.25 BTC, many miners with more expensive energy bills or inefficient hardware ended their operations and tried to find other uses for their once-expensive CPUs and GPUs. The shift was unsurprising, considering the reward would be halved and the efforts to mine BTC increased.
The upcoming year will witness Bitcoin’s fourth halving since its inception, which will cut rewards from the 6.25 BTC received at the moment for mining coins to 3.175 BTC. The cycle of reward reductions will likely continue until 2140, when we expect to see the last coin being mined and the era of PoW for Bitcoin ending.
Computers are becoming increasingly less efficient, causing worries
Bitcoin miners power up their computers in light of improving cryptocurrency prospects. While increased interest in Bitcoin, whether mining or as investment, is a good sign for the cryptocurrency, rising Bitcoin difficulty isn’t exactly a reason to rejoice for participants in the mining industry. A more challenging mining process calls for new and more efficient equipment, which comes with a hefty price tag. At the same time, it can take a toll on the environment, given the high amounts of energy consumed, which Bitcoin has already been criticized for. Increased mining difficulty means more power, computers, and machinery to generate the same quantity of coins.
However, should a miner want to indulge in this endeavor, they must remember that the reward for mining coins will be halved next year.
What can we expect from now on?
Bitcoin mining has come a long way since the coin emerged on the market, giving new meaning to the financial realm. From miners to experts in the sector, they’re debating whether the difficulty will grow further or slow down. So far, according to analysts, an interval of more than 10 minutes between finding blocks indicates that another increase in difficulty is expected soon. Projections now show that a potential growth from 1.1% to 2.51% may occur, meaning that Bitcoin difficulty will surpass its 50 trillion thresholds for the first time in the coin’s lifespan.
What do you think will occur after Bitcoin passes the $50 trillion mark?
