Bitcoin Mining Difficulty Rises, Extending Recovery After China Crackdown

The Bitcoin blockchain's mining difficulty increased by 13%, but industry experts say operators are still looking at fat profits ahead.

AccessTimeIconAug 25, 2021 at 7:29 p.m. UTC
Updated Sep 14, 2021 at 1:45 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin's mining difficulty – a measure of the amount of computing resources required to mine bitcoin – has increased for the third time in a row in yet another sign of the network's staying power following a crackdown on the industry earlier this year by authorities in China.

Mining difficulty is a key element of the Bitcoin blockchain's built-in self-stabilizing mechanisms. When more crypto miners are operating on the network, blocks tend to be discovered or mined more quickly. As miners drop off the network, they are found less frequently. To compensate, the blockchain's programming automatically adjusts periodically to ensure that data blocks continue to get mined on average every 10 minutes or so. This process was hard-coded into the Bitcoin blockchain's original programming when the network was launched over a decade ago.

At 14:41 UTC on Wednesday, the blockchain's mining difficulty increased by 13.2% at block 697,536, according to several mining sites.  

The latest increase in the bitcoin mining difficulty comes as some operators creep back online after previously dropping off the network following China's crackdown and as North American miners expand capacity.

The Bitcoin mining difficulty resets roughly every two weeks and is a key gauge of the network's health as well as a crucial factor in determining miners' profit margins.   

As bitcoin’s hashrate, a measure of the total computational power being used to secure the blockchain network, hit a low point a couple months ago, bitcoin’s difficulty level recorded its largest drop in history, on July 3. 

The 14-day moving average of the bitcoin hashrate has rebounded roughly 25% from its low point in late June, according to Arcane Research. The number stood at 123 exahashes per second on Tuesday, according to data from Glassnode. An exahash represents a quadrillion computations.

Hashrate ribbon crossing
Hashrate ribbon crossing

Even though the Bitcoin mining difficulty has been increasing, it’s still a good time for miners, industry experts said.

“Bitcoin mining has never been more profitable,” said Dave Perrill, CEO at crypto mining colocation company Compute North. "Look at the percentage of price run that bitcoin had over the last 12 months and look at the hashrate percentage increase, and it's nowhere near in line."

Bitcoin was trading at $48,899 as of press time, up 1.86% over the past 24 hours.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.