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For the better part of the past two months, it has been on an impressive upward trend, even with minor fluctuations. After Donald Trump won in August, the price topped $70,000, surpassing its 2021 high, and within days the $100,000 milestone was within reach. It was a historic feat.
As Bitcoin continues to hold above this psychological level, something else is unfolding, something that was entirely expected. One analyst has observed a steady increase in Bitcoin mining difficulty since August last year.
Since August 2024, mining difficulty has been increasing aggressively, with quarterly difficulty changes increasing from negative values to +24%.
This shows that miners are actively introducing new equipment and increasing the overall hash rate of the network. Essentially, this… pic.twitter.com/uVfsMl9TLh
— Axel
Adler Jr. (@AxelAdlerJr) January 21, 2025
This means that it has become harder for miners to mine Bitcoin (BTC), with the quarterly difficulty adjustment moving from negative to around +24%. Many in the industry expected this rapid change.
In early August, the price of Bitcoin fell, dropping below $50,000 and bottoming out at $49,000. Many thought the fairy-tale rally that began in 2021 was over.
However, since then, momentum has changed rapidly and Bitcoin has regained and consolidated its position above $55,000 and $60,000. This recovery coincided with an impressive expansion in mining difficulty.
Bitcoin Mining Difficulty: A Proof of Bitcoin’s Strength
Changes in Bitcoin mining difficulty are often closely correlated with price movements. As the price rises, mining becomes more difficult as miners put in more resources to maintain a consistent flow of coins.
This mechanism is exactly how Satoshi Nakamoto designed his network.
Due to mining difficulties, the network cannot distribute 3.125 BTC approximately every 10 minutes without adjustment. As of January 22nd, Mining difficulty It hit a new record high of 110 trillion.
(sauce)
Each time the mining difficulty increases, the farm requires more computational resources and energy, leading to increased operating costs.
The silver lining for ordinary users is that, regardless of spot prices or difficulties, as long as miners are active, the Bitcoin network remains stable and secure, ensuring a seamless transfer of value at all times.
And for this, the mainnet rewards their efforts through block rewards and block fees.
Difficulty, hashrate, profitability
Bitcoin's design makes it difficult to adjust in response to price fluctuations. Rising prices often indicate increased network demand, increasing difficulties.
As the network recently halved mining rewards, mining farms are now allocating more resources and streamlining their operations to maintain profitability. In the coming years, much of the revenue will come from transaction fees rather than block rewards.
Despite record mining difficulty and reduced block rewards compared to last year, miners are currently highly profitableProbably because there are only a few major mining pools and farms currently operating..
Currently, mining is dominated by a small number of mining pools, with Foundry USA and Antpool leading the pack, together contributing over 50% of the total hash rate.
(sauce)
According to glass node datathe average cost to mine a single Bitcoin is less than $35,000, compared to the spot price of $105,000 on exchanges such as Binance.
(sauce)
Each halving cycle eliminates weak miners. This can cause the hash rate to drop temporarily, as was seen in April 2024, but it typically recovers steadily over time.
(sauce)
The current hash rate is mirror Climb difficulty is 786 EH/s, just below the previous high of 817 EH/s.
Read more: New Solana Layer 2 successfully raises $11M in funding, SOL price hits new weekly high
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