According to recent data, the difficulty of mining Bitcoin has decreased by 3% following the latest adjustment. This could potentially lead to an increase in the network’s hashrate. When miners successfully solve blocks on the Bitcoin network, they are rewarded with a certain amount of BTC.
The Impact of Stagnating Hashrate on Bitcoin Mining Difficulty
These block rewards are the only way to introduce new coins into circulation, and the rate at which blocks are solved can be seen as the production rate of the cryptocurrency.
Satoshi incorporated a feature known as mining difficulty into the blockchain, which regulates the level of difficulty miners face when attempting to solve blocks on the network. This innovative solution allows the chain to adjust its difficulty based on the total amount of computing power, or hashrate, that miners have dedicated to the network.
These adjustments are made in such a way as to counteract any impact that changes in the hashrate may have on the network’s economics. For example, if the hashrate increases and miners become faster at solving blocks, the blockchain will increase the difficulty during the next adjustment to bring the rate of block solving back to the desired pace.
The entire process of adjusting the mining difficulty is fully automated and controlled by the code written by Satoshi. These adjustments occur approximately every two weeks, with the most recent one taking place just yesterday. During this latest adjustment, the difficulty of mining Bitcoin decreased by approximately 3%.
Recently, the difficulty of mining Bitcoin reached an all-time high, as the network’s hashrate was also near its peak. Despite the latest downward adjustment in difficulty being relatively small, the metric remains close to its all-time high.
Earlier this year, the Bitcoin hashrate was steadily increasing as miners were motivated to expand their operations due to the high revenues generated by the cryptocurrency’s rally. However, recently, miners have stopped investing in their mining farms as the hashrate has entered a period of stagnation.