Bitcoin mining difficulty increased 3.16% on Tuesday, marking its fifth consecutive increase and the longest streak of upward adjustments since February 2020, according to data from BTC.com. Mining difficulty is increasing as bitcoin’s price and its hashrate have seen a strong recovery in the third quarter, paring some losses from the early summer.
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Positive difficulty adjustments are far more common than negative adjustments. But streaks of five or more upward adjustments have become less frequent over the past several years.
2021 saw the most severe downward difficulty adjustments in Bitcoin’s history after China’s crackdown on mining caused the leading cryptocurrency’s price and hashrate to plummet. But in the following few months, hashrate has rebounded strongly.
The average adjustment in the past five epochs was nearly 6.8%.
The below chart shows positive and negative difficulty changes over the past few years. Although upward adjustments far outnumber negative ones, streaks of five or more are rare.
There isn’t much market insight to gain from observing this sequence of difficulty increases. But the series of increases is a strong signal that even though the market was rattled by the negative regulatory news from China, new hashrate is coming back online in droves as some miners are relocating and others are scrambling to bring new ASICs online as fast as possible to take advantage of this unusually profitable time to mine.
Where bitcoin’s price will go from here is uncertain. At the time of writing, bitcoin was trading around $44,000, according to OnChainFX, down roughly 20% from its monthly highs near $53,000.
Assuming the price doesn’t completely implode, miners should continue to bring more machines online to exploit this era of unusual profitability and as a result. The bitcoin network, illustrated by the demand for ASICs, recovering hashrate, and increased difficulty, has proven its strength and resilience.