Bitcoin Hashrate Breakout Leads to Biggest Difficulty Adjustment in a Year, But Why?
Data shows that the recent increase in the Bitcoin hash rate has now resulted in the largest difficulty adjustment to the network in over a year.
Bitcoin Mining Difficulty Increases After ATH in Hashrate
According to the latest weekly report from Arcane Research, the BTC block production rate reached a value of nearly 7 recently after the hashrate spike.
“Mining hashrate” is an indicator that measures the total amount of computing power connected to the Bitcoin blockchain.
Using this available hashrate, miners hash blocks (or more simply, handle transactions) on the network, and the pace at which they do this process is known as the block production rate.
As part of its functions, the BTC chain aims to keep it so that this rate remains almost constant. However, when the hashrate registers a change, the block production rate also shifts its value.
For example, an increase in the hash rate causes miners to hash blocks faster since they have a higher amount of power online now. As a countermeasure to this, the concept of Bitcoin “mining difficulty” comes into play.
The difficulty value determines how much power miners need to mine a block. If the metric goes up, the miners’ pace slows down, thus reducing the block production rate and sending it back to the network’s intended value.
These network difficulty adjustments are periodic and occur approximately every two weeks. Moreover, the whole process is automatic; the blockchain’s code itself decides how much the value should change.
The most recent difficulty adjustment took place a few days back, and it pushed the metric’s value up by 13.5%, marking the highest change since May 2021.
Now, why did the difficulty change so drastically recently? A look at the Bitcoin mining hashrate chart can be very revealing:
Looks like the value of the metric has spiked up | Source: Arcane Research's The Weekly Update - Week 40, 2022
As you can see in the graph above, the Bitcoin mining hash rate skyrocketed recently and set a new all-time high.
Because of this, the block production rate increased to 6.94 per hour, an unusual value that is much higher than the network target of 6 blocks per hour.
And so, to account for this rapid growth in hash rate, the chain had to increase its difficulty significantly.
BTC price
At the time of writing, Bitcoin’s price is hovering around $19k, down 4% in the last week.
The value of the crypto hasn't shown much movement during the last few days | Source: BTCUSD on TradingView
Featured image from TheDigitalArtist on Pixabay.com, charts from TradingView.com, Arcane Research
