YEREVAN (CoinChapter.com — Bitcoin’s mining difficulty reached a new high of 72.01 trillion on Dec. 25, a significant increase from the previous 67.30 trillion ten days ago. This metric, which gauges the complexity of mining Bitcoin, is determined by a target hash value that miners strive to achieve in their operations.
In detail, mining difficulty in Bitcoin measures how hard it is to find a new block in the blockchain. It’s quantified by a difficulty number, which adjusts approximately every two weeks (or every 2,016 blocks).
This adjustment ensures that block creation remains consistent (about every 10 minutes), despite changes in the network’s total hashing power. The more miners and computational power in the network, the higher the difficulty, of maintaining a stable rate of new Bitcoin entering the system.
Mining Difficulty Soars in December
With the mining difficulty for Bitcoin now at 72 trillion, miners must produce hash values below this level to mine new blocks. After a 6.98% increase in difficulty, the next adjustment is expected around Jan 5, 2024.
As Bitcoin’s mining difficulty increased, the network’s hashrate soared to new heights, reaching a record 538 exahash per second (EH/s) on Dec 24, 2023. This peak followed an earlier record of 527 EH/s on Dec 20. Around 50 mining pools contribute to Bitcoin’s network, with Foundry USA leading, providing over 32% of the total hashrate.
Did you know? Hashrate refers to the computational power per second used when mining in the context of Bitcoin mining. It’s essentially the speed at which a miner’s system operates in solving the complex mathematical problems that lead to mining new Bitcoin blocks. A higher hashrate means more chances of finding the next block and receiving the mining reward. It’s usually measured in terms of ‘hashes per second’ and can range from kilohashes (KH/s) to exahashes (EH/s) for large mining networks.
The increase in Bitcoin’s hashrate in 2023 coincides with a major expansion in mining operations. Leading ASIC manufacturers released advanced mining rigs, significantly enhancing mining efficiency. This advancement in technology led to large-scale investments by mining companies.
Publicly listed firms spent $600 million on new equipment in December and $1.3 billion over the year on ASICs, highlighting the industry’s growth and technological progression.
BTC Reserves Dropping
According to on-chain tracker CryptoQuant, Bitcoin miner reserves have dropped since October 2022, around the previous price peak.
The net flows also indicate that miners are selling more than holding their Bitcoin while the overall activity has subsided.
Additionally, miner netflow and reserves impact Bitcoin price through supply dynamics. When miners accumulate Bitcoin (positive netflow), it suggests they expect higher prices, reducing immediate sell pressure on the market.
Conversely, when miners sell (negative netflow), it increases Bitcoin’s circulating supply, potentially pressuring prices downwards. The collective action of miners in either holding or selling their Bitcoin reserves can thus influence market supply and demand, subsequently affecting Bitcoin’s price. As of Dec 25, BTC/USD stood at above $43,200.
