The typical Bitcoin hash rate is dropping.
This year, the Bitcoin hash rate has hit many all-time highs, despite the fact that the price hasn’t reflected the network’s development.
Bitcoin mining difficulty has decreased for the first time since November 2021, according to the most recent difficulty adjustment. Since the previous six positive difficulty adjustments, the newest Bitcoin mining difficulty has adjusted by 1.49 percent. Every time miners had to spend more processing power, the Bitcoin mining process grew more energy-intensive. There was a small rise in block duration to 10 minutes and 9 seconds over the last two weeks from the average of 197.19 exahashes per second
The mechanics of the difficulty adjustment
In the Bitcoin network, the difficulty of new blocks is automatically adjusted every 2,016 blocks, or about every two weeks. According to the Bitcoin whitepaper, Satoshi Nakamoto wrote:
In order to calculate the proof-of-work difficulty, a moving average is used, which targets an average block count each hour. The difficulty rises if they’re created too quickly.
Since the block duration was increased to 10 minutes and nine seconds, the difficulty of mining decreased somewhat.
What will happen to the Bitcoin hash rate in the future?
Bitcoin’s hash rate is expected to rise significantly in 2022, according to most experts. The hash rate drop is expected to be the only one in 2022, since additional Bitcoin mining farms are coming up every week. It’s a drop in the bucket when compared to the previous decreases.
The price of Bitcoin plummeted when China prohibited Bitcoin mining, and the hash rate fell as well. Although countries like Kazakhstan, the United States, and Canada eventually made up the difference, it took the network a few months to get back on its feet. ‘The latest downturn, on the other hand, is unlikely to culminate in such a protracted decline. There has been an increase in nations realising the advantages of Bitcoin mining for their economies.
The mining of Bitcoin is expected to bring in nine-figure income for countries like Laos. There’s a lot of mining going on in Australia, as well. Furthermore, Intel plans to produce a new processor that will make Bitcoin mining even more efficient and profitable.
If you look at most indications, it seems like the mining sector is only going to increase, resulting in stronger fundamentals for Bitcoin and a higher price for the currency. It becomes more secure as more miners join the market, and more processing power is effectively backed up by the network. Because of this, greater hash rates may lead to an increase in costs and the reverse is also true
Finally, if global economic warfare and sanctions regimes intensify, the decentralisation of Bitcoin mining may become a major narrative move for bulls. In the near future, even nation-states may use Bitcoin mining as a tool to further their own political ends by providing financial incentives to citizens.