Spike in the bitcoin network hashing power indicates a return to double-digit difficulty growth

bitcoin mining

Image source: https://bitcoinwisdom.com/bitcoin/difficulty

After three consecutive single-digit difficulty increases, bitcoin miners are bracing for a return to steep growth in the hashrate and steadily diminishing returns for old hardware. If the current hashrate increase holds, the next difficulty increase will happen around August 19, and will increase roughly 20 percent. 

While not exactly welcome, this is a moderate increase by bitcoin standards. Considering that the network has gained nearly 30 Petahash of power since the last increase on August 8, and currently tops out at around 177.5 PH/s, the situation could certainly be worse. That said, with nearly a week until the next increase, those estimates could change quickly.

What’s to blame for the increase? A better question might be “Why has the difficulty been so low for the last six weeks?” Did we see the results of the bitcoin mining community holding its collective breath until the delivery of new ASICs? Or is the situation more complex and nuanced than that?

Clearly the changes have something to do with the delivery and activation of new mining hardware, and perhaps a boost in new investment in industrial-scale hashing centers. It’s also possible that a reshuffling of mining pools in the wake of the GHash.io 51% incident may have played a role.

For many miners, however, the time for speculation about the past is over. Instead, it’s back to the grind of pool selection, hardware upgrades and ongoing cost/benefit analysis.

Written on 14 Aug 2014.