Increasing hash rate increases the difficulty of mining Bitcoin
As the crypto market grapples with larger macroeconomic trends, the past week continued its up-and-down movement. However, one of the most important developments the crypto world noticed was a jump in Bitcoin mining difficulty.
It’s generally a good sign when bitcoin mining becomes difficult because it means more miners need to verify cryptocurrency transactions, which improves the network’s security. These jumps tend to have an impact on the price of Bitcoin, and it also gives an indication of where the asset may be headed in the short term.
Bitcoin Mining Difficulty Up 9%
Bitcoin’s mining difficulty has increased by 9% in the past week and currently stands at 30.97 trillion. An increase in mining difficulty means that miners must put in more computing power to be able to mine a block. It also points to the participation of more miners, as the mining process becomes more computationally demanding as more come on board.
Although miners may have to put in more effort, a higher mining difficulty also means that the network is more secure. Furthermore, more miners joining the effort means the network grows – which is good for Bitcoin’s price in the long run.
Bitcoin’s mining difficulty is automatically adjusted approximately every two weeks to keep the total block time at 10 minutes. The next difficulty adjustment will take place on September 14th.
The 9% jump makes the mining difficulty the highest Bitcoin has experienced since May 2022. The price of the asset is not necessarily correlated with the mining difficulty, as there have been instances where the price has stayed within a small range. On other occasions, it has been accompanied by a noticeable drop or rise in Bitcoin’s price.
Short-term Bitcoin price is somewhat unpredictable
As of this writing, Bitcoin is trading below $20,000, and it is in the red. The market may be in the midst of an extended period of stagnation as several developments unfold. The tightening fiscal policy of the US Federal Reserve looms large, while inevitable regulatory changes also threaten to affect the market in the short term. In the long term, however, an increase in mining difficulties will give some legitimacy to the market. Therefore, investors can take comfort in the fact that more miners can jump on board, expand the network and set it up for a better future.
