Bitcoin Mining Difficulty Reaches All-Time High as Market Drops

New data suggests that the bitcoin mining difficulty has reached an all-time high as the price of the asset hits a one-year low.

Mining difficulty, which is a way to measure the problem of finding the hash of a block of transactions on the bitcoin blockchain, has just reached an all-time high of 31.25 trillion hashes, data from BTC.com shows. This difficulty occurred at block 735840.

Bitcoin has been showing a close correlation with tech stocks recently, dropping to $29,000 briefly on Monday before rebounding to $31,134.79. 

According to Bloomberg, every downtrend in bitcoin prices since 2014 has ended with it reaching its 200-day moving average price, which, at this stage, could see it touching the $20,000 mark.

Revenue per day coming from guessing the correct block hash and transaction fees has dropped from $32.28 million on Tuesday to $30.47 million today and could drop even further should bitcoin approach the $20,000 mark. 

Coupled with the spike in mining difficulty, many miners could find themselves in an unprofitable space, and choose to close up shop, potentially leaving tens of thousands of dollars worth of equipment unused until the difficulty decreases.

Bitcoin mining difficulty calculated every two weeks

Mining difficulty is calculated approximately every 2,016 blocks or roughly every two weeks. The mining difficulty number represents the number of required guesses of a block’s hash before finding the correct answer. 

The most recent increase in difficulty was 4.89%, with an average block time of nine minutes and 32 seconds, requiring 223.7 exahashes per second of computing power.

If there was no dynamic adjustment of difficulty, as more miners join the network with increasingly powerful computers, the time to solve a block could be dramatically reduced, resulting in more coins being rewarded to miners in a short space of time, devaluing bitcoin. 

In the early stages of bitcoin mining, block times of over 15 minutes were not uncommon. The highest block time for a difficulty epoch was recorded by BTC.com as 29 minutes and 40 seconds in Sept 2009.