Bitcoin Mining Difficulty Increases for the Fourth Time Since Halving
The Bitcoin mining difficulty has increased once again. A 2.3 percent increase from the previous existing difficulty levels was reported on September 12, 2016, making it the fourth raise (fifth correction) since the Bitcoin mining rewards halving in early July 2016
At present, the difficulty level stands at 225,832,872,179 compared to the earlier level of 220,755,908,330. Similarly, the total hash rate of the Bitcoin network has also increased from 1,580,232,334 GH/s to 1,616,574,667 GH/s during the same time interval.
Bitcoin Mining Difficulty and Block Generation Times
The difficulty level correction is an inbuilt function in the Bitcoin software to ensure constant block generation times. The Bitcoin network ideally discovers/generates one new block every 10 minutes. The block generation time has a direct correlation with the difficulty levels and network hash rate. The use of latest mining hardware known for greater efficiencies increases the total hash rate of the Bitcoin network. This, in turn, will significantly reduce the average time taken to discover new blocks. In such cases, the Bitcoin network starts to take corrective measures by increasing the difficulty levels. These corrective measures maintain block generation times at the stipulated 10 minute (600 seconds) intervals.
Bitcoin Mining Difficulty and Prices
The mining difficulty also has a direct correlation with the Bitcoin price as well. A comparison with Bitcoin price trends shows that the mining difficulty increases as the Bitcoin price increases and vice versa. The recent increase in mining difficulty can be attributed to the expansion of mining activities, introduction of more powerful mining hardware and an increased demand for the digital currency. As we saw in the last couple of weeks, the value of Bitcoin has significantly increased since its fall in August, following the Bitfinex incident. The increase in Bitcoin value has coincided with the latest change in difficulty levels.
The difficulty correction feature ensures a constant, steady supply of Bitcoin to the network. It prevents miners from investing in powerful mining equipment to mine large amounts of digital currency, which otherwise will lead to increased supply, resulting in the fall of Bitcoin prices. The constant stream of rewards combined with controlled mining will also ensure continued miners’ support to the Bitcoin network, at least until all the blocks are mined.
An analysis of Bitcoin block generation time versus difficulty shows a progressive reduction in the block generation time. At this rate, we can expect the difficulty to increase yet again in the coming weeks.