Mining difficulty on the Bitcoin network increased by 9.32% and hit an all-time high of 26.64 trillion on Jan. 21, at 3:07 UTC, beating the previous record set on May 13, 2021.
The difficulty is automatically adjusted based the amount of computational power on the network, or hashrate, to keep the time it takes to mine a block roughly stable at 10 minutes. The higher the hashrate, the higher the difficulty, and vice versa.
On May 13, 2021, bitcoin's mining difficulty hit a record 25.04 trillion, as primarily Chinese and North American miners deployed their machines.
The difficulty started dropping later in May when miners in China, at the time the biggest bitcoin mining country, went dark to comply with a regulatory crackdown. Hashrate and difficulty kept falling until late July.
Most miners from China estimated that they would come back online in Q1 2022, so “we can attribute a good bit of this increase [in difficulty] to Chinese miners finally coming online in North America,” Whit Gibbs, CEO of Compass Mining, told CoinDesk.
As Chinese miners found new homes for their operations, and new facilities came online, the hashrate and difficulty started to increase. By December, the hashrate had almost recovered from its July lows.
Given the soaring price of bitcoin last year, miners booked “super profits,” so they tried to get more mining capacity online as fast as possible, Jaran Mellerud, researcher at Oslo's Arcane Research told CoinDesk.
Analysts and industry insiders expect the trend to continue well into 2022, as miners in North America, Russia, and Europe, plan to deploy even more machines - barring any unforeseen event like China's ban on crypto mining or a dramatic fall in the price of bitcoin.
“In 2022, we expect record growth of this indicator,” Roman Zabuga, a PR representative for mining host BitRiver, told CoinDesk.
“From July 2022 to December 2022, most of the largest miners have enormous deliveries of the Antminer's newest ASIC Antminer S19 XP. These deliveries will make the difficulty soar throughout the whole 2022,” Mellerud said.
Europe-based consultant at PROOFOFWORK.ENERGY Alejandro de la Torre added that mining continues to grow in surprising ways. Across Europe, many “are already or about to start mining bitcoin with extra, unused electricity capacity,” he said.