Bitcoin Mining Difficulty: Here's What You Need to Know

Anisa Batabyal
| 04 February, 2020 | 2 min

As the Bitcoin Halving event is getting closer, there are widespread speculations on the Bitcoin mining difficulty, which is determined by the Bitcoin hash rate. January 2020 is experiencing three times higher mining difficulty as compared to January 2019. In the last 4 days, Bitcoin mining difficulty rose by over 8%, and reached 14.8T. The BTC hash rate is at ATH of 120 TH/s since January 1st, 2020. This is notably a huge adjustment considering that the difficulty normally reconfigures itself by 1-2% percent on average.

A crypto analyst, Plan B has tweeted this a few days back:

What is Bitcoin Mining Difficulty?

Bitcoin Difficulty measures how difficult it is to find blocks below a stated threshold. Actually, Bitcoin’s mining difficulty adjusts every 2016 blocks or after two weeks at 10-minute blocks (depending on the mining difficulty of the prior 2016 blocks). If the mining difficulty is increasing currently, it implies that the past mining difficulty was low. 

The Mechanism

Mining Difficulty involves an incredible economic balance between the profit for miners and the mining cost. The difficulty adjusts itself depending on the number of miners on the network and market conditions. This leads to securing of the network by the miners without being forced to shut down their rigs or overproducing. This increase in difficulty leads to an increase in hash rates. An increase in both the mining difficulty and hash rate makes it hard for the miners to make great profits using current mining equipment. The situation will be worsened by the Bitcoin Halving expected to take place in five months, which will halven the block reward.

Impact on Bitcoin Price

Bitcoin price is something that gets impacted firstly irrespective of whatever it is. This time, it is going to be positive, as the crypto enthusiasts are ready for the bullish run. Bitcoin has been performing quite well since the year started, and managed to show an upward trend thereafter. Bitcoin is trading at $9372 as of today. The Bitcoin community is thrilled for one of the biggest event of the year,i.e, the third Bitcoin Halving, scheduled for May 2020.

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