Return to status quo as bitcoin mining difficulty increases in the double digits

Since July 12, bitcoin miners have had a much-needed break from the relentless growth in the mining difficulty. As one of the key metrics determining just how profitable a mining operation is, and a relative measure of how much competition there is to solve the next block in the block chain and gain a 25 BTC reward, most miners have been more than happy to see marginal increases of 3%, 8% and 5.3% over the last few adjustments. Yesterday, however, that period of smooth sailing ended with a new difficulty of 23,844,670,039, a nearly 21% increase from the last update.

Prior to the recent lull, bitcoin has been experiencing double-digit growth since late May of 2013.

As always, the news of an increased difficulty isn’t purely bad news. Over the last few weeks, at least 35 petahash of power has been added to the bitcoin network. As we reported yesterday, much of that power comes from industrial-scale “hashing centers” located across the globe, making the network ever-more resistant to attack.

An increase in mining power also tends to have upward pressure on bitcoin’s price, as it requires progressively more computing power to keep the same chance of solving a block as the network grows. As mining each block becomes more expensive, the price most miners are willing to sell their newly minted bitcoin at also increases. The massive increase in mining difficulty means that a huge amount of hashing power was brought online in the last few days, meaning that some group believes they’re likely to see a meaningful return on the tens of millions of dollars they invested.