According to BTC.com data, mining difficulty reached 9.06 trillion (T) at block height 584,640 around 9:17 UTC on July 9, surpassing the previous record of 7.93 T by 14.23 percent. This was the strongest growth in any two-week period since August 2018 – a sign that competition among miners is not only intensifying but doing so at an accelerated rate.
The bitcoin network is designed to adjust its mining difficulty every 2,016 blocks (roughly 14 days) based on the participating mining power in each cycle, in order to ensure the block-producing time at the next period stays at about every 10 minutes.
When there are fewer machines competing to solve bitcoin’s hash function to earn newly created bitcoin, the difficulty will fall; when more players jump in, it rises.
Competition right now is so fierce, mining difficulty has leapfrogged the entire range of eight trillion to break the threshold of nine trillion. The estimated difficulty by BTC.com at the next adjustment period could be as high as 10.35 T, which would be another 14.17 percent increase.
Similarly, the amount of computing power devoted to securing the bitcoin network has also logged the biggest growth of any two-week difficulty adjustment cycle since August 2018, based on BTC.com data and CoinDesk’s calculations.
Enthusiasm for bitcoin mining has pushed the hash rate to as high as 74.5 quintillion hashes per second (EH/s) as of July 5, in line with predictions by mining farms in China that have been plugging in machines to take advantage of cheap hydroelectric power during the rainy summer season.
The total hashing power is expected to continue rising as the peak rainy season is still months away in southwestern China, an area that is estimated to account for half of bitcoin’s global mining production.
Boom and bust
Bitcoin mining difficulty took a significant hit last year amid the market downturn. It dropped as much as 30 percent from October to December and only got back to the previous high last month.
That said, the increases in bitcoin’s hash rate and mining difficulty have not yet caught up with the pace of bitcoin’s price jump, at least not as much as they did in the bull run during the second half of 2017.
According to CoinDesk’s Bitcoin Price Index data, bitcoin’s price surged by 400 percent from around $4,000 to nearly $20,000 between June and December 2017. During the same period, the network’s computing power grew by at least 200 percent.
However, while bitcoin’s price has shot up to as much as $12,000 in June – a 300-percent jump since it fell to $3,000 early this year – the network hash rate has only increased by 100 percent over the same period.
The reason for this lag is an insufficient supply of new bitcoin mining equipment to meet the market’s demand since major miner makers are hitting a bottleneck of production capacity resulting from a limited supply of chips from semiconductor vendors.