Bitcoin (BTC) difficulty, a parameter that virtual currencies use to keep the average time between blocks fairly steady as the blockchain network’s hash power changes (where a relatively high difficulty may help with securing the blockchain against attacks), increased for the fifth straight time – which is notably the longest streak since February of last year.
As mentioned in a report published by Compass Mining, Bitcoin mining difficulty surged 3.16% on Tuesday (September 21, 2021), marking its 5th consecutive increase and “the longest streak of upward adjustments since February 2020, according to data from BTC.com.” Mining difficulty is increasing as Bitcoin’s price and its hashrate (the amount of computing power securing the BTC network) have “seen a strong recovery in the third quarter, paring some losses from the early summer,” the Compass Mining blog post noted.
It also mentioned that “positive difficulty adjustments are far more common than negative adjustments,” however, streaks of five or more upward adjustments have “become less frequent over the past several years.”
The report added:
“2021 saw the most severe downward difficulty adjustments in Bitcoin’s history after China’s crackdown on mining caused the leading cryptocurrency’s price and hashrate to plummet. But in the following few months, hashrate has rebounded strongly.”
The report further noted that the average adjustment in the past five epochs “was nearly 6.8%.” While upward adjustments outnumber the negative ones, “streaks of five or more are rare,” the report confirmed.
The report, prepared by crypto mining expert Zack Voell, added:
“There isn’t much market insight to gain from observing this sequence of difficulty increases. But the series of increases is a strong signal that even though the market was rattled by the negative regulatory news from China, new hashrate is coming back online in droves as some miners are relocating and others are scrambling to bring new ASICs online as fast as possible to take advantage of this unusually profitable time to mine.”
The report further noted that where BTC’s price “will go from here is uncertain” and that “at the time of writing, Bitcoin was trading around $44,000, according to OnChainFX, down roughly 20% from its monthly highs near $53,000.”
The report concluded:
“Assuming the price doesn’t completely implode, miners should continue to bring more machines online to exploit this era of unusual profitability…. The bitcoin network, illustrated by the demand for ASICs, recovering hashrate, and increased difficulty, has proven its strength and resilience.”