Bitcoin mining difficulty – the main measure of competition for mining rewards on the original Bitcoin blockchain network – has had its biggest two-weekly jump in nearly a year.
June’s powerful rally in the price of bitcoin drove a surge in competition among miners, and at an accelerated rate, forcing the network to adjust its mining difficulty level at an increased pace.
According to BTC.com data, mining difficulty reached a new record level of 9.06 trillion at block height 584.640 on July 9, surpassing the previous record of 7.93 trillion. This represents a jump of 14.23% – the strongest for any two-week period since August last year.
Competition Adds Difficulty
The network adjusts its mining difficulty every 2,016 blocks, which takes around two weeks. It bases its difficulty level on the participating mining power to ensure that block production time stays at around 10 minutes. When competition increases the difficulty level is raised, and is lowered when fewer miners compete.
Growth in bitcoin mining during the recent rally – which saw bitcoin’s price peak at an intraday high of $13,930 on June 26 – has also driven the hash rate to a record 74.5 quintillion (74,500,000 trillion) hashes per second on July 5, according to data from Blockchain.com.
Cheaper Power
Not only has the recent rally in bitcoin prices contributed growth in production metrics, but also the availability of cheap power in countries such as China and Iran, where mining farms are springing up thanks to subsidised electricity.
In China, miners make use of cheap hydroelectric power, which is about to become even more abundant as the rainy season approaches in southwestern China.
Moreover, mining farms are becoming ever more prevalent across Iran where state-subsidised electricity is being used for bitcoin production. Indeed, the Iranian government is beginning to take notice and is due to impose modified pricing structures for electricity usage for miners in the coming weeks.
In the meantime, it has started to shut down some of the operations it can identify to stop abuse of its electricity network.
Mining Gear Availability
There has, however, been a lag in the increasing hash rate compared to the rally in bitcoin prices due to the lack of supply in new mining equipment to meed market demand.
Coindesk reported on June 25 that pre-orders for the new mining rig produced by Canaan – one of the top-three market leaders in mining gear – were backlogged through to October delivery due to the massive surge in mining interest.
