Bitcoin mining difficulty hit a new high in 2024. It has been rising proportionally to Bitcoin’s price since about 2019. Before that, it was almost entirely flat.
NEW: #Bitcoin miner difficulty hit a new ATH 🚀 pic.twitter.com/OOMWi8NdVU
— Bitcoin Magazine (@BitcoinMagazine) August 8, 2024
How is Bitcoin mining measured?
Bitcoin mining difficulty is measured in terahashes (T) or as a “difficulty target.” It measures how hard it is to find a new block in the Bitcoin blockchain. It’s currently around 62T.
The actual difficulty is a number representing how much harder it is to mine a block than 1, the lowest difficulty level. The difficulty level adjusts approximately every 2,016 blocks (about every two weeks) to ensure that miners can find new blocks roughly every 10 minutes.
There is a target threshold to express the difficulty. Miners must produce a hash (a number) below this target to add a new block. The lower the target, the harder it is to find a valid hash.
Mining difficulty and BTC price performance
Generally, there is a positive correlation between Bitcoin’s price and mining difficulty. When the price increases, more miners participate in the network because the potential rewards are higher. This increase in mining activity boosts the network’s total hash rate, increasing mining difficulty.
The increase in difficulty often lags behind the increase in price. This is because miners take time to acquire and deploy new hardware. As more miners come online, the network adjusts the difficulty to maintain the average block time.
When Bitcoin’s price is high, mining becomes more profitable, attracting more miners. As more miners enter the network, the increased competition makes mining more difficult.
When Bitcoin’s price drops significantly, some miners, especially those with higher operational costs, may find it unprofitable to continue mining. This can lead to a drop in the network’s hash rate, which might result in a lower difficulty level after the next adjustment.
Some analysts use mining difficulty to gauge the network’s overall health and security. A consistently rising difficulty suggests confidence in Bitcoin’s future value, while a declining difficulty indicates the opposite.
