Bitcoin Difficulty Headed Toward 4% Increase Following Hashrate Explosion

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On-chain data shows the Bitcoin Difficulty is set to increase by around 4% in the coming adjustment, as a result of the increase in the Hashrate.

Bitcoin Mining Difficulty Will Jump On Sunday

According to data from CoinWarz, the BTC network is set to increase the Difficulty in the next adjustment. The “Difficulty” here refers to a metric built into the Bitcoin blockchain that controls how hard the miners would find it to mine a block. This feature exists to constrain how much time the miners take to find the next block.

Every time that the miners mine a block, they harvest a reward associated with it known as the block subsidy. This reward serves as the only possible way to produce more of the asset, so by controlling the pace at which the miners can receive it, the inflation of the cryptocurrency can be controlled.

As is common knowledge, miners on the Bitcoin network require computing power in order to perform their task of mining. This total computing power held by the validators is known as the “Hashrate.”

Whenever the miners increase the Hashrate, they become faster at their task, and churn out blocks at a faster rate. As explained before, the network doesn’t want this to happen, so what it does is that it increases the Difficulty just enough that the miners would be back to the standard network pace, which is a block every 10 mins.

Similarly, if the miners reduce the Hashrate, the chain responds by lowering the Difficulty. All these changes related to the metric take place about every two weeks during automatic network adjustments.

Below is the relevant data related to how the blockchain is looking heading into the next such adjustment, which should be this Sunday.

Bitcoin Difficulty Increase

As is visible, the average block time since the last Difficulty adjustment has been 9.60 mins, which is clearly lower than the 10 mins that the network aims for. Thus, to slow down the validators, the chain will raise the Difficulty by more than 4%.

The reason behind the low block time lies in the explosion that the Hashrate has seen, as the chart for the 7-day average value of the metric from Blockchain.com shows.

Bitcoin Hashrate

From the graph, it’s apparent that the 7-day average Bitcoin Hashrate set a new all-time high (ATH) just a couple of days ago. The indicator has since seen some pullback, but its value is still quite close to this record. Should the Difficulty go up by 4% as it’s looking right now, it would also set a new ATH.

BTC Price

At the time of writing, Bitcoin is trading around $97,000, down more than 6% over the last week.

Bitcoin Price Chart

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