Bitcoin Mining Complexity Records Fresh All-Time High
The Bitcoin network’s mining difficulty grew by 9.32 percent and reached an all-time high of 26.64 trillion on Jan. 21, at 3:07 UTC, surpassing the previous record of May 13, 2021. The difficulty is automatically modified depending on the network’s processing capacity, or hashrate, in order to maintain the time required to mine a block approximately constant at ten minutes. The hashrate is proportional to the difficulty, and vice versa.
On May 13, 2021, bitcoin’s mining difficulty reached a record 25.04 trillion, mostly due to the deployment of equipment by Chinese and North American miners. Later in May, difficulty began to decline when miners in China, the world’s largest bitcoin mining nation at the time, went quiet in response to a governmental crackdown. Hashrate and difficulty levels continued to decline until late July.
The majority of Chinese miners anticipated resuming operations in Q1 2022, and so “we can ascribe a significant portion of this rise [in difficulty] to Chinese miners eventually resuming operations in North America,” according to Whit Gibbs, CEO of Compass Mining. As Chinese miners established new locations for their operations and added additional facilities, the hashrate and difficulty began to climb.
By December, hashrate had recovered nearly entirely from its July lows. Given the skyrocketing price of bitcoin last year, miners sought to ramp up mining capacity as quickly as possible, according to Jaran Mellerud, a researcher at Oslo’s Arcane Research.
Analysts and industry insiders anticipate the trend to continue far into 2022, as miners in North America, Russia, and Europe intend to install even more machines — barring any unexpected catastrophe, such as China’s crypto mining ban or a precipitous drop in bitcoin’s price.
“By 2022, we anticipate this indicator to reach new heights,” said Roman Zabuga, a public relations manager for mining site BitRiver. “Between July and December 2022, the majority of the world’s biggest miners will get massive deliveries of Antminer’s newest ASIC, the Antminer S19 XP. These deliveries will increase the challenge into 2022” as Mellerud said.
Consultant located in Europe for ProofOfWork.Energy Alejandro de la Torre continued by stating that mining continues to expand in unexpected ways. Throughout Europe, many “are currently mining bitcoin or are planning to do so using spare power capacity,” he claimed.