By
Bena Ilyas
April 25th, 2024
As per report by Blocksbridge, the Bitcoin mining difficulty could spike by 6.8% in one of the biggest increases this year in 2022.
For the month of August, the Bitcoin hashrate has been continuously on the rise as miners started rejoining the network after a strong capitulation phase for the past several months.
Bitcoin Mining Difficulty to Increase
Hashrate measures the total computing power required by any blockchain network. On the other hand, the Bitcoin network difficulty defines how much work miners need to do in a proof-of-work system for adding a new block to the Bitcoin blockchain. Bitcoin mining difficulty is also responsible for maintaining a steady rate of inflation.
The goal behind adjusting the Bitcoin mining difficulty is to keep the average block generation time at ten minutes. The higher the hashrate, the greater the mining difficulty. For the month of August 2022, the Bitcoin mining difficulty touched 28.35T at a block height of 749,952. This was still 10 down from the previous high of 31.25T back in May 2022.
However, the average block time has reached 9.1 minutes. Thus, it signals a potential increase in difficulty to take the block time to ten minutes. As per the report from Blockbridge, the Bitcoin mining difficulty could spike by 6.8% in one of the biggest increases this year in 2022. The Bitcoin mining difficulty adjustments happen every two weeks.
Miners with Older Equipment Can Suffer
During a strong capitulation over the last few months, top Bitcoin mining companies were consistently selling their BTC to meet operational costs amid the crypto market crash. Besides, they were also buying new equipment for capacity expansion.
Currently, the Bitcoin price is facing strong selling pressure and trading under $20,000. Bitcoin and the broader crypto market came under intense selling pressure after the Fed’s Jackson Hole meeting last week.
In their report, Blockbridge has cautioned that miners with older equipment could suffer. This will also affect block subsidies. Blocksbridge noted that the bear market could be brutal, especially for miners with outdated equipment and rigs. During the second quarter, public-listed Bitcoin miner Riot blockchain reported huge losses.
Amid the current macro environment, if BTC continues to stay under strong selling pressure, the miner capitulation could prolong even more. An analyst from CryptoQuant reported that the BTC miner balance has turned negative. In a message last week, analyst Baro Virtual noted:
“The percentage change (%) in the positions of BTC miners indicates that miners have again moved to reduce their reserves since August 08, 2022, and now their net balance is in the negative zone. At least in the short term, this alignment is not something good!”
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