- For the first time in the history of Bitcoin, the mining difficulty is up by 2.18%
- The apparent reason is the rising competition which impacts the profitability ratio too.
There’s a reason why the creation of cryptocurrency is called mining. Like the mining process, it too is like looking for the desired item among the rubble. Not just that, the process of generating Bitcoin contains lots of complexities. It involves the tweaking of computing power, hash rates, and lots of things that are mind over matter for laymen.
Let’s understand what’s happening
Without getting into the technicalities, we can just apprehend that miners are facing some difficulties (2.18% precisely) in creating Bitcoin. Notably, this level of difficulty is the highest and has been faced by the miner from the very inception of the original crypto.
To put it in plain words, higher difficulty means more people are trying to generate it. When that happens, the ratio of profit decreased and the network’s hash rate increases to a voluminous rate.
And as per the fundamentals of supply and demand, a certain commodity’s price is increased when its availability is scarce. But in this context, that’s not the concern yet. The rise of difficulty is itself a big incident which caused some worries in the crypto community. Now let’s take a glimpse through the following points for better understanding.
Key Facts about Bitcoin Mining
- As per the data released from BTC.com on June 1, a 3.4% rise has been recorded in the previous adjustment. On Wednesday, the recorded adjustment was 52.35 trillion at block height 794,304. The difficulty rate was major and it became an unsettling piece of information for many in the crypto space.
- The difficulty rate rises when the number of miners increases causing an intense competition to attain rewards. For the uninitiated, miners gain rewards for creating coins and for validating transactions on the network. When the difficulty ups, the chances of creating an entire block lessens. As a result, the profitability of the miners takes a hit.
- In the mechanism of blockchain, the level of computing power and hash rate changes directly impact the adjustments. Consequently, they aggravate the difficulty rate.
- In simple words, the difficulty rates, hash rate, and overall profitability are co-dependent on each other. The Chief of Digital Power Optimization, Andrew Webber threw some light on this context in an emailed response. He said that Bitcoin prices going higher translates into greater profits for miners. The only problem is, they have to double down on efforts.
- On Wednesday, Bitcoin’s hash rate saw a jump from 375.4 exahashes to 392.6 exahashes per second. This is so far the high jump recorded since the mining of Bitcoin began.
- On the other hand, the numero uno crypto saw a mixed response from the markets. In Hong Kong, its price fell 3.63% in the last 24 hours. But based on the data from Coin Market Cap, it registered a 51% rise this year. In terms of market capitalization, Bitcoin lost a total of 5.01% in the past seven days.
Conclusion
Bitcoin’s price has seen fluctuations so many times. However, the rise in difficulty rate is the first occurrence. No one knows for sure when it would go down and markets aren’t churning out speculations about it too. So we’ll have to wait and see if this has some real impact on the markets or not.