Mining difficulty on the bitcoin network has increased by nearly 9% today as investors push the price of the number one cryptocurrency back into the $19,500s. The increase in the mining difficulty reflects a higher network-wide hashing rate which is consistent with higher mining revenues.
Bitcoin’s Mining Difficulty Is Now Only 4.4% Shy Of ATH
Bitcoin mining difficulty is a metric that is used to measure how hard it is to solve puzzles that generate the next block on the BTC network. The difficulty automatically adjusts every 2,016 blocks, which is basically every two weeks. Currently, it is quite challenging for miners to solve the required mathematical puzzles.
According to data provided by blockchain analytics firm Glassnode, bitcoin’s mining difficulty increased by 8.9% today. This upward adjustment puts the difficulty at just 4.4% below its previous all-time high.
An increase in mining difficulty is often linked to a similar increase in the bitcoin hash rate. Indeed, the bitcoin network hash rate — the amount of computing power on the network — is currently hovering at 130.20 exahashes per second (EH/s), according to BTC.com’s data.
After slumping to 106EH/s from mid-October to the beginning of November as the rainy season in Sichuan, China came to an end, the hash rate has evidently recovered and is set to continue climbing higher.
What Does This Mean For Bitcoin?
Thanksgiving saw bitcoin’s price plummet from $19K highs all the way back to the lower $16K region. However, things were better over the weekend as the price of the flagship crypto clawed its way back above $18,000 and has now breached $19,500 once again.
A positive adjustment in the bitcoin difficulty has historically marked the beginning of a new bull market, for instance in 2013 and 2016. However, it is not guaranteed that the current rally will repeat the bullish history.
What’s clear as day, however, is the fact that an increase in mining difficulty results in high transaction fees and longer block times. The size of unmined transactions in bitcoin’s mempool will also increase. At the moment, it costs roughly $2.60 to transact on the bitcoin blockchain.
At press time, bitcoin is trading at $19,662.21, up 8.25% on the day. The cryptocurrency is on track for a historic monthly close despite the $3,000 setback last week. In other words, the current price is notably higher than the previous monthly all-time highs seen in October 2013 and April 2017 and every time bitcoin has surpassed the previous monthly record high, it “mooned super hard”. This is the observation of crypto analyst Lark Davis.