Bitcoin Network Difficulty Hits a New All-Time High of 29.794T

About a week ago, the Bitcoin blockchain, home to the world’s largest digital currency, made headlines after the network’s mining difficulty hit a new all-time high. This marked the second time in April that the network had set a new record; the value surged from its previous peak at 28.587 trillion to rest at its latest high of 29.794 trillion.

This development gave rise to a ton of speculation and discussion about the future of the digital currency, especially seeing that the market for BTC has been especially volatile recently. Regardless of the price activity, the network’s mining difficulty has been on a steady uptrend since late last year, as shown by data from BTC.com.

Let’s look at the various developments the Bitcoin network has seen over the past few days. We’ll also consider less recent but relevant events as we attempt to shed light on the implications of the increase in mining difficulty.


Bitcoin Mining

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Before we delve into the main topic, it’s essential to understand a few fundamental aspects of the Bitcoin ecosystem, beginning with how BTC tokens are created. This takes place through a process called mining. Mining serves two primary purposes, it facilitates the completion of transactions and produces new bitcoins.

To carry out the mining process, miners use sophisticated machines known as Bitcoin mining rigs to solve complex math problems. These miners compete to solve the puzzle first, and the term mining difficulty describes how hard it is to find the solutions to the problems.

However, by solving them, miners verify transactions and add the details of operations to the blockchain to complete each block. The miner who solves the puzzle receives a set quantity of bitcoins, known as the block reward; these bitcoins are newly formed. More miners (nodes) have become part of the network as Bitcoin heads toward mainstream adoption.

Naturally, this should mean miners complete blocks faster. However, Nakamoto designed the system to raise the difficulty of the problems as more miners race to solve them. Depending on the number of nodes and computing power, the Bitcoin network adjusts the mining difficulty after the 2016 blocks are complete. This ensures new bitcoins are mined at a steady interval of 10 minutes.


Hash Rate Also Hits Record High

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Network difficulty and hash rate are somewhat associated with each other. The hash rate is a measure of a miner’s performance; it is a measuring unit for the computational power miners utilize in solving problems to verify transactions and mine BTC.

A rise in hash power reflects an increase in the network’s nodes; the system tries to balance the greater number of miners by raising the mining difficulty. However, the Bitcoin hash rate has risen over the past few weeks alongside the network difficulty. It has also hit new highs and currently rests at about 223.20 exahashes per second.


Greater energy consumption would typically follow an increase in the number of nodes; however, according to Digiconomist charts, the Bitcoin network doesn’t appear to be using a larger quantity of energy. This means that the rise in the hash rate is likely due to more efficient mining equipment rather than a rise in miners. Faster, energy-friendly machines will see the hash rate rise while running on less energy.



The Relationship Between the Hash Rate and Bitcoin’s Price Action

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Whether or not the hash rate and BTC value are connected is an oft-debated topic in the crypto space. Some believe a surging hash rate means the network is healthier and more secure, which will reflect in its token price. Crypto analyst Willy Woo is an avid supporter of this theory.

Those on the other end of this argument believe the price of BTC is what determines the behavior of its hash rate. The logic here is that the high value attracts miners, who drive up the hash rate. Over the past few months, however, the value of Bitcoin has been on a steady downward trend, a phenomenon that carried over from last year.

Regardless, the hash rate has continued to increase, and this discredits the idea that the hash rate and price of BTC have a strong correlation.


The Bitcoin Network’s Impressive Recovery

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Hitting these milestones is a testament to the resilience of the Bitcoin network. In July last year, the hash rate took a sharp plunge downwards after the Chinese government banned crypto mining operations within its borders. Most of the industry’s miners had settled in that region, and China’s crackdown resulted in a large-scale exodus.


Following this, network mining difficulty dropped down to a paltry 13.67 trillion. Fast forward 12 months and the mining sector has experienced a full recovery; the difficulty is more than twice the previous figure. As mentioned earlier, Bitcoin made history two times in April, with a three-week space between both records.

Before the record highs, Bitcoin had begun to show its strength, its hash rate grew by 70% over three months, and by late 2021, it was back to normal, even reaching a new ATH.

In addition to showcasing the network’s ability to recover, the rise in mining difficulty has helped cement Bitcoin’s place in the crypto space as one of the most secure networks. Its high difficulty means network interactions call for vast amounts of computational power. This keeps malicious actors from gaining easy access to the network to manipulate records; hence the blockchain is more secure.



Author: Gate.io Observer: M. Olatunji
* This article represents only the views of the observers and does not constitute any investment suggestions.
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