Bitcoin Difficulty and Hash Rate Hit All-Time High as Prices Fall


Bitcoin’s mining difficulty this week set a new all-time high of 26.64 trillion as the Bitcoin network’s total hash rate hit a record high of 199 TH/s. While such a turn of events is entirely predictable given the Bitcoin algorithms, they both happened while the price of Bitcoin is actually falling. Is this the start of the cryptapocalypse?

To avoid “oversupply” or “undersupply” of Bitcoin and a consequent drop or increase in its value/purchasing power, the difficulty of Bitcoin mining is automatically adjusted based on the cumulative computational performance of the Bitcoin network (the estimated number of total terahashes per second). This is done to keep the time it takes to mine a block to around 10 minutes. As more nodes are added to the network, it increases the difficulty of mining a coin or decreases it when there are fewer nodes available. The difficulty is adjusted every 2,016 blocks (about two weeks).

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After China banned cryptocurrency mining at the end of May 21, the Bitcoin network’s total hash rate fell from 180.666 million TH/s on May 14 to 86 million TH/s on July 4. Today, the total network hash rate sits at 198,864. million TH/s, a historic record, according to Bitcoin’s mining difficulty also reached its all-time high of 26.64 trillion (up 9.32% from the previous all-time high in mid-May) on January 21 and will continue to rise as more mining machines will go online, reports CoinDesk.

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As the Bitcoin network regained its performance since early July (as mining farms from China moved to Kazakhstan, Russia and even the United States), the price of Bitcoin rose and reached $67,582 in mid -November. But now that the Bitcoin network is better than ever and the mining difficulty is higher, Bitcoin is priced at $37,962, down 44% from its November peak.

“Given the surge in bitcoin price last year, miners booked ‘super profits,’ so they tried to get more mining capacity online as quickly as possible,” said researcher Jaran Mellerud. at Oslo’s Arcane Research, during a conversation with CoinDesk. From July 2022 to December 2022, most of the biggest miners have huge shipments of Antminer’s latest Antminer S19 XP ASIC. These deliveries will escalate the difficulty throughout 2022.”

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One of the things with Bitcoin is that its price now hardly depends on the amount of Bitcoins mined, which is why fluctuations between $67,000 and $38,000 occur. But as Bitcoing mining difficulty increases while Bitcoin price decreases, will it be this profitable to purchase and deploy new mining hardware at a rapid pace in the future?


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