Bitcoin Mining Difficulty Hits New All-Time High of 55.64 Trillion Hashes – Why This is Bullish for the BTC Price
The mining difficulty of Bitcoin recently hit a new all-time high of 55.64 trillion hashes. This is great news for those bullish on the cryptocurrency and can further strengthen the overall BTC network. What is mining difficulty? Mining, or “proof-of-work mining”, is the process by which a decentralized ledger is kept secure and all transactions are verified. Miners compete with each other to solve complex mathematical problems in order to be rewarded with Bitcoin. This is done by using specialized hardware to validate and “solve” these puzzles – referred to as “hashes”. The mining difficulty is a measure of how difficult it is for a miner to solve the blocks in the blockchain and is regularly adjusted based on network usage. As more miners join the network and more blocks are processed, the mining difficulty increases in order to slow the rate of block creation. Why is this all-time high bullish for the price of Bitcoin? The increase in network difficulty suggests that the amount of hashing power (and miners) on Bitcoin’s network is continuing to grow. This is a positive sign for the network’s security, decentralization, and ultimately its price. The more hashing power that miners bring to validate blocks, the harder it becomes for malicious actors to control the network. This reduces the risk of a 51% attack, which could crash the Bitcoin network and thus its price. Furthermore, the increase in difficulty indicates that miners are investing in more powerful hardware, and this is a good sign for the network’s future. Mining hardware developments are hampering the progress of potential 51% attacks and making it difficult for larger players to control the network. The increase in network difficulty also has a direct correlation with network fees, as the difficulty represents the cost per transaction miners must spend on hardware in order to earn rewards. If the network fees become too high, miners will be incentivized to drop off the network, resulting in a drop in difficulty and increasing the chances of a 51% attack. As such, this all-time high in network difficulty indicates that the Bitcoin network is likely to remain secure and decentralized, and is a bullish sign for the BTC price in the coming months and years.