Bitcoin Hashrate Breakout Leads to Biggest Difficulty Adjustment of the Year, Why?

Data shows that the recent surge in Bitcoin hashrate brought the network the biggest difficulty adjustment in over a year.

Bitcoin Mining Difficulty Soars Following Hashrate ATH

According to Arcane Research’s latest weekly report, the BTC block production rate recently reached a value of almost 7 after the hashrate surge.

“Mining Hashrate” is a metric that measures the total amount of computing power connected to the Bitcoin blockchain.

Using this available hashrate, miners hash blocks (or, more simply, process transactions) on the network, and the pace at which they do this process is known as the block production rate.

As part of its functioning, the BTC Chain aims to keep this rate fairly constant. However, every time the hashrate registers a change, the block production rate also shifts its value.

For example, the upward trend in hashrate leads to faster hashing of blocks as miners now have more power online. As a countermeasure against this, the concept of “mining difficulty” of Bitcoin comes out.

The difficulty value determines how much power a miner needs to mine a block. As the metric rises, the pace of miners slows down, so the block production rate drops and returns to the network’s intended value.

These network difficulty adjustments are regular and occur approximately every two weeks. Also, the entire process is automated. The blockchain code itself determines how much the value changes.

The latest difficulty adjustment was made a few days ago and saw a 13.5% increase in the metric value, the biggest change since May 2021.

So why the sudden change in difficulty recently? It’s very clear when you look at Bitcoin mining hashrate charts.

Looks like the value of the metric has spiked up | Source: Arcane Research's The Weekly Update - Week 40, 2022

As you can see from the graph above, the Bitcoin mining hashrate has recently surged to new all-time highs.

This increased the block production rate to 6.94 per hour. This is an anomaly that far exceeds the network goal of 6 blocks per hour.

As such, the chain had to increase the difficulty significantly to account for this sharp increase in hashrate.

BTC price

At the time of writing, Bitcoin’s price is hovering around $19,000, down 4% over the past week.

The value of the crypto hasn't shown much movement during the last few days | Source: BTCUSD on TradingView

Featured image from TheDigitalArtist on Pixabay.com, charts from TradingView.com, Arcane Research