Bitcoin mining difficulty is the gauge on how hard it is to mine a block on the bitcoin network. From a more technical point of view, the difficulty is how hard it is to find a hash below a given target. The higher the mining difficulty, the more power is consumed to mine the same amount of blocks.
Bitcoin miners are currently encountering the most significant mining difficulty ever on the bitcoin blockchain. The mining difficulty has skyrocketed to a record high, amid growing interest in the cryptocurrency industry. The rise in difficulty suggests that small-scale miners, retail miners, and BTC aficionados must surrender computing power to large bitcoin mining firms, until at the very least, when the subsequent adjustment occurs, phasing down the difficulty levels.
Bitcoin mining difficulty goes through the ceiling
According to the blockchain analytics firm, Glassnode, the difficulty of mining a single bitcoin block increased by 3.6 percent. The increase in the difficulty might not be that huge, but it pushed the bitcoin network to a new record ATH, registering 17.56 trillion (T). The previous all-time high was back in July.
#Bitcoin mining difficulty increased by 3.6% and is at an all-time high.
— glassnode (@glassnode) August 24, 2020
Notably, the mining difficulty is amended after every 2016 blocks mined. This may take approximately two weeks, maintaining the average time between two blocks at 10 minutes. However, the difficulty level might either surge upwards or decrease.
High difficulty shuts down small scale miners
A rise in bitcoin mining difficulty means more computing power is required to mine blocks. The increasing difficulty is not good at all to small scale miners, as the massive difficulty levels need more complex mining equipment. Most of these small miners are forced to close down operations, leaving mining to big corporations with sophisticated equipment.
Furthermore, a rise in difficulty affects the entire bitcoin community, since more complex equipment is necessary to keep the whole BTC network operational. In the meantime, despite the surging mining difficulty, the price of BTC is still on the rise. The world’s largest cryptocurrency is now trading within the $11,500-$12,000 price range.