Bitcoin Mining Industry Is Booming: Difficulty Up 14%, Reaches New High, Will BTC Price Follow?
If 2018 was an awful year for Bitcoin, 2019 is certainly being the exact opposite of that. As the price of BTC tokens has started to soar again, a lot of people in the industry are getting pretty excited about the prospects of the future and this means that miners are back in the game.
Several miners have left the market when the prices hit their lowest point recently, but they are getting back and now the mining difficulty has surged over 14% recently, according to BTC.com, a popular Chinese crypto mining pool.
On July 9, when the 14% increase happened, the average hash was 64.85 EH/s, a new all-time high in the industry. It was a year ago when this happened for the last time. Back in late July 2018, the block difficulty went up 15% during the 2,016 block interval.
The hash rate was only 42.59 EH/s at the time, however, which means that the difficulty was lower, hitting only 5.95 T. This week, the difficulty reached 9.06 T, a considerably higher number.
In case you are not aware, the mining difficulty is generally adjusted in order to keep a consistent block being mined every ten minutes. The change in the difficulty happens every 2,016 blocks, which generally take around two weeks to be mined.
This means that if there are more miners working at the same time, the difficulty will spike and it will fall when these miners decide to shut down their machines. It is a counterbalancing mechanism that is used in order to balance the network.
Now, the difficulty is expected to spike even more in the future. We are around 11 days from the next update and it looks that a boost is expected to go up at least 10%, not so much as this week but still a considerably high growth rate.
The deficit in the difficulty is generally calculated by taking into account how much time it takes for a block to be mined. For instance, a block is taking around 8 minutes and 46 seconds recently. This is short over 10% of the desired time of 10 minutes that should be the ideal.
Historically, the increases can be even higher than the ones that we are seeing these days. There are reports of the block difficulty going up over 20% in some cases. However, it should also be noted that the difficulty was considerably lower at these times and that the “volatility” on this aspect was higher because adoption was not as big as today.
Back in 2010, during Bitcoin’s infancy, for instance, there were hikes which were almost as high as 56%.
Last December, when some people were abandoning the network, the network faced one of its largest drops in difficulty so far: the difficulty went 15% down. This was the second-largest drop ever seen and was largely due to the fact that Bitcoin had lost over 80% of its price that year.
The recovery was only started after April 2019 when the current bull run started. When this happened, the miners finally decided to start mining tokens again as it was becoming once more a profitable ability.