Bitcoin Mining Difficulty and Hash Rate Trends

Bitcoin mining difficulty rose 3.9% on Tuesday, reaching an all-time high as the seven-day moving average hash rate for the network hit record levels. The adjustment occurred at block height 866,880, with a new difficulty record of 95.7 trillion, surpassing the previous peak of 92.7 trillion set in early September.

Understanding Bitcoin Mining Difficulty

Bitcoin mining difficulty is a relative measure indicating how hard it is to mine a new block. It automatically adjusts every 2016 blocks (approximately every two weeks) to maintain an average block discovery time of 10 minutes, regardless of the number of miners.

Before Tuesday's adjustment, Bitcoin blocks were mined at a faster-than-average pace of one block every nine minutes and 37 seconds, according to Clark Moody’s dashboard. Higher difficulty means more computational power and energy is required to find the correct hash for the next block. An increase in miners raises the difficulty, while a decrease lowers it.

Bitcoin Network Reaches Record Hash Rate

On Monday, Bitcoin's hash rate reached an all-time high of 723.6 EH/s, crossing 700 EH/s for the first time, according to The Block’s data. After declining initially post the fourth halving on April 20, miners have ramped up their hash rate since hitting a low of 550.3 EH/s in June.

Following the halving event, miners' revenue significantly dropped from $72.4 million to a range of $25 to $35 million, making it challenging for less efficient miners to stay competitive. The hash price also fell to a record low of $0.04 in September, recovering slightly to $0.048.

Public Miners Consolidate Market Share

Despite challenging conditions, U.S. public miners are consolidating their market share as they deploy new capacity and upgrade their equipment. According to an October 16 report by VanEck, publicly traded miners account for 30% of the total network hash rate.

Matthew Sigel and Nathan Frankovitz from VanEck noted that any shifts toward AI and high-performance computing (HPC) by these miners could impact global hash rate and difficulty.

In 2024, strategies among miners have diverged, with AI-focused companies like Core Scientific, IREN, and Terawulf outperforming traditional Bitcoin mining firms like CleanSpark, Riot, and MARA. AI firms are benefiting from growing demand for computing services, while traditional miners argue that the return from Bitcoin mining is quicker due to lower infrastructure costs and faster energization.

As of now, Bitcoin is trading at $67,318, down 0.4% in the last 24 hours but up 6.6% over the past month and 59.2% year-to-date.