Bitcoin mining difficulty increases by 14 percent

Data from the Chinese mining pool BTC.com show that the level of difficulty has risen by 14 percent. That is the first time in a year.

An increase of no less than 14 percent

On July 9, the level of difficulty rose by more than 14 percent to 9.06 trillion (9.06 T), with an average hash rate of 64.85 EH / s. That is a new record for the bitcoin network.

The last time the network saw such an increase in bitcoin mining difficulty was at the end of July 2018, when the difficulty increased by 15 percent.

However, at that time the average hash rate was 42.59 EH / s and the absolute difficulty was significantly lower 5.95 T.

Bull market provides growth

The bitcoin algorithm is self-directing. This means that the degree of difficulty adapts to the hashing power that is supplied by miners. The higher the delivered hashing power (or computer power), the harder it is to find a block. But that does not happen immediately, that adjustment takes place every 2,016 blocks. That is approximately every two weeks.

Now that we are in a bull market, it is more attractive to mine bitcoin. After all, miners earn more transaction fees and the value of a blockreward is higher. This is also supported by figures on BTC.com. The next time the difficulty level is adjusted, and that is in 9 days, finding a block will be 10 percent more difficult.

At the moment it is therefore 10 percent too easy to find a block. This is also reflected in the average block period. Bitcoin is written in such a way that it takes an average of 10 minutes before another block is found. This way you get controlled inflation. But now there is more computer power available than the network had expected, so finding a block now takes on average 8 minutes and 46 seconds. About 10 percent shorter than normal.

Bear market, on the other hand, is causing a fall

Last December the rate fell back to 3,200 dollars. Then we were in a bear market. You also saw that in the difficulty level. On December 3, the difficulty level dropped by no less than 15 percent!

The difficulty level was reduced because a lot of miners stopped. That again has to do with the course. The course went down, so that miners were rewarded less and less. At some point the costs are too high for the benefits and it is no longer profitable to continue with this. Around 600,000 miners were stopped in 2018. But the bitcoin protocol also states that inflation must be predictable, that a block must still be found on average every ten minutes. That is why the level of difficulty has decreased.

Uhh .. mining and difficulty? How does that work?

Imagine a table with a thousand cups. Under each cup is a piece of paper with a number between 1 and 1000. At the lowest level of difficulty you ask a miner to find a number between 1 and 1000. He already found it on his first attempt. We make something harder. He must find a number between 1 and 500. That’s a bit harder. A friend of the miner arrives and wants to participate. The two of them are now looking for a number between 1 and 500. Now it is becoming too easy again, they find the number very quickly. Out of the blue the bell rings and ten others want to participate. The system must now regulate itself to keep it exciting. Now they have to look for a number between 1 and 5.

A miner shoots a number in an algorithm and that number (along with numbers coming from the previous block) is hashed to a result. That result must be lower or equal to the difficulty level.