On-chain data shows the Bitcoin network Difficulty is set to go up in the next adjustment and is estimated to reach a new all-time high (ATH).
Bitcoin Difficulty Will Go Up Again In The Upcoming Adjustment
The “Difficulty” refers to a feature present on the Bitcoin blockchain that dictates how hard the miners currently find their task of mining blocks on the network.
The feature exists to ensure just one thing: that the rate at which miners add blocks to the chain remains constant. Whenever miners solve a block, they receive a block subsidy as compensation, so by locking the speed of these chain validators, the Difficulty makes it so that they get this reward at a consistent pace as well.
The reason Satoshi programmed the Difficulty into the blockchain lies in the nature of the block subsidy itself. The coins miners earn from it are freshly minted, meaning that every time they solve a block, the total supply of the cryptocurrency goes up.
If miners could indefinitely speed themselves up by simply adding more computing power, the asset’s supply would be flooded with tokens. But thanks to the existence of the Difficulty, this runaway inflation is an impossible scenario.
That said, miners can deviate from their usual pace for short periods, as the Difficulty doesn’t show an immediate change. More specifically, there is a window of about two weeks between each network adjustment.
The adjustments are fully automatic, with the Difficulty being changed exactly enough in them to bring the miners back to the standard pace of a block every 10 minutes.
The next adjustment is set to occur later today at midnight, UTC. Below are the details related to this event from CoinWarz.
Looks like the block time on the network has been lower than needed | Source: CoinWarz
As is visible, the Bitcoin miners have taken an average of 9.58 minutes per block during the last couple of weeks, suggesting that they have been faster than the network wants.
The BTC blockchain will now respond with an increase in Difficulty, which is currently estimated to be of about 4.35%.
The trend in the BTC mining Difficulty during the last few months | Source: CoinWarz
The last adjustment also led to an increase in the indicator, although it was a notably smaller one. This new jump would take the metric to around 126.95 terahashes, which is a new record.
The ATH in the Difficulty is arriving as the 7-day average of the Bitcoin Hashrate, a measure of the total computing power employed by the miners, has been inching toward a new high as well, as data from Blockchain.com displays.
The BTC Hashrate has been following an upward trajectory in recent days | Source: Blockchain.com
BTC Price
At the time of writing, Bitcoin is floating around the $105,800 level, down more than 2% over the last seven days.
The price of the coin appears to have seen bearish action during the last few days | Source: BTCUSDT on TradingView
Featured image from Dall-E, Blockchain.com, CoinWarz.com, chart from TradingView.com
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