On January 21, 2022, at 3:07 UTC, the Bitcoin network’s mining difficulty climbed by 9.32 percent, reaching an all-time high of 26.64T, breaking the previous record of 25.04 T on May 13, 2021.
The mining difficulty automatically alters based on the amount of processing power on the network or hashrate. This is done to maintain the time taken to mine a block, which is roughly 10 minutes.
Why the sudden rise?
The difficulty started to drop after China, the largest Bitcoin mining country at the time, decided to place a blanket ban on all crypto activities in the country. However, the majority of Chinese miners predicted that they would reopen in Q1 2022.
READ ALSO: Microstrategy will “never” sell Bitcoin and that’s its strategy
Compass Mining’s CEO, Whit Gibbs, told CoinDesk that the increase in difficulty can be attributed to Chinese miners coming online in North America. The hashrate and difficulty began to rise as Chinese miners found new homes for their operations and new facilities came online. The hashrate had almost recovered from its July 2021 lows by the year-end.
What does this tell us about Bitcoin’s current status
The rise in the difficulty has also resulted in an increased hash rate for the BTC. At the time of writing, Bitcoin’s total hash rate was 198.8m TH/s, according to Blockchain.com.
READ ALSO: Bitcoin Price Prediction: Will the global markets put BTC on the fence?
This was a reflection of BTC’s security assurance. Although Bitcoin was on a downtrend- dropping below the $40,000 mark, its security was at an all-time high. This was a crucial metric to keep in mind as it showed the miner’s positive sentiment regarding BTC. Miner’s are not part of the selling circle and are holding on to their coins.
Bitcoin miners continued to remain bullish on BTC. As per the data on Cryptoquant, the Miners Position Index remained very consistent from March of 2021, up until even now. The MPI has oscillated between 0.5 to -0.7. This goes to show that miners still find value in mining BTC.
Future trend of Bitcoin mining difficulty
Analysts and industry insiders predict that the trend will continue far into 2022, with miners in North America, Russia, and Europe planning to install even more machines – barring any unforeseen events such as China’s crypto mining ban or a sharp drop in bitcoin’s price.
READ ALSO: Robinhood exec answers to “When Shib” queries
Analysts and industry insiders predict that the trend will continue far into 2022, with miners in North America, Russia, and Europe planning to install even more machines – barring any unforeseen events such as China’s crypto mining ban or a sharp drop in bitcoin’s price.
Miners made “huge gains” last year due to the high price of bitcoin, therefore they attempted to get additional mining power up as soon as possible, Jaran Mellerud, a researcher at Arcane Research in Oslo, told CoinDesk. Roman Zabuga, a PR representative for mining host BitRiver, said that we will see record growth of this indicator in 2022.