The 6.8% Increase will Bring Bitcoin Mining Difficulty to an All-Time High.
According to an analysis by Blocksbridge, the difficulty of mining bitcoins might grow by 6.8% in 2022, which would be one of the greatest increases this year.
The Bitcoin hashrate has been steadily increasing over the month of August as miners began re-joining the network after a prolonged period of significant capitulation.
The Difficulty of Mining Bitcoin Will Rise
Hashrate is a metric for determining how much computational power a blockchain network needs overall. The Bitcoin network difficulty, on the other hand, establishes how much effort miners must put in to a proof-of-work system in order to add a new block to the blockchain. The difficulty of mining bitcoins is also accountable for keeping inflation at a constant pace.
To maintain the average block production time at ten minutes, the Bitcoin mining difficulty is adjusted. The difficulty of mining increases with hashrate. The difficulty of mining Bitcoin reached 28.35T in August 2022 with a block height of 749,952. Still, this was 10 below the previous peak, which was 31.25T, set in May 2022.
The average block duration has nonetheless grown to 9.1 minutes. As a result, it suggests that increasing the block period to 10 minutes may be more challenging. According to the Blockbridge research, one of the largest rises in mining difficulty this year might occur in 2022, when it would rise by 6.8%. Every two weeks, the Bitcoin mining difficulty is changed.
Older equipment may cause problems for miners.
Top Bitcoin mining businesses continuously sold their BTC to cover operating expenses during a significant capitulation over the last three months as the cryptocurrency market crashed. In addition, they were investing in new machinery to increase capacity.
The price of bitcoin is now trading below $20,000 and is under heavy selling pressure. After the Fed’s Jackson Hole conference last week, there was a lot of selling pressure on bitcoin and the larger cryptocurrency market.
Blockbridge has issued a warning in its research that miners using outdated equipment may suffer. Block subsidies will also be impacted by this. Blocksbridge warned that the bear market may be harsh, particularly for miners using obsolete rigs and equipment. Riot blockchain, a publicly traded Bitcoin miner, announced enormous losses during the second quarter.
The miner capitulation may persist longer in the current macro climate if BTC remains under heavy selling pressure. According to a CryptoQuant expert, the balance of Bitcoin miners has changed to the negative side. Last week, analyst Baro Virtual remarked in a message:
“Since August 8, 2022, miners have again moved to diminish their reserves, as shown by the percentage change (%) in their holdings in BTC, and as a result, their net balance is currently negative. This alignment is not positive, at least not in the near run!