The broader crypto market has been facing turbulence since the start of this year itself. The year 2021 turned out to be the best phase for the crypto industry by now which experienced enormous success within the similar timeframe. Given various incidents took place this year, led the crypto market facing tough phases overall. The recent crypto winter made almost every other crypto asset struggling including top cryptocurrencies bitcoin (BTC), Ethereum (ETH), Solana (SOL), Cardano (ADA), and many others.
The top cryptocurrency has another growing issue that could curb the possibility of growth in the upcoming near future. This would happen due to bitcoin mining difficulty which has been on consistent rise for a long time now. Recently the bitcoin mining difficulty has reached an all time high which is 35.61 trillion. This means that mining of one bitcoin (BTC) would need a staggering 35.61 trillion hashes.
Recent difficulty showed up after an increase of 13.55% which is also the highest raise since May. The difficulty gets measured after completion of every 2016 block over the Bitcoin blockchain—which approximately takes two weeks to get complete.
The Bitcoin algorithm manages to maintain the difficulty so that a block takes at least ten minutes to complete. This notion of reaching the ideal spot of ten minutes is responsible for either making the mining difficulty relatively higher or lower.
Many factors make an impact on mining difficulty such as mass deployment of computational power which eventually decreases the time to mine a block, the number of miners mining bitcoin over the blockchain, etc.
Recent rise in mining difficulty is considered as a result of the Merge upgrade on Ethereum network. Since the network transitioned from proof-of-work to proof-of-stakes, it made a huge number of Ethereum (ETH) miners out of the network. These miners reportedly joined the bitcoin network and hence played a crucial role in increasing the bitcoin mining difficulty.
In 2021, bitcoin mining difficulty reached a contemporary high of over 25 trillion in May but soon the graph took a steep drop and by June the difficulty went down to less than 14 trillion. The significant drop in difficulty took place after the sanctions of China over the crypto and its operations. The crackdown also impacted the mining operation in the country which was the biggest mining hub in the world by the time.
Every time bitcoin mining difficulty surges, it makes it harder for miners to mine the crypto asset given more requirement of computing power to process the same block. This came as another hard hit over the drop in bitcoin production given the recent crypto winter.
Many prominent crypto mining companies turned incapable to continue their operations given the liquidity crunch. Two of the many examples were Argo Blockchain and Compute North. The former had to sell its assets worth over 15 million and generated about 27 million in recent funding while the latter had filed for bankruptcy itself.
Source: https://www.thecoinrepublic.com/2022/10/11/bitcoin-mining-difficulty-attaining-new-heights-so-does-for-miners/