Bitcoin Mining Difficulty Hits Record High, But Downward Adjustment Expected

The Bitcoin mining difficulty has recently climbed to an all-time high of 127.6 trillion earlier this week. However, this peak is expected to be temporary. According to data from CoinWarz, the next difficulty adjustment—scheduled for August 9—is projected to bring the figure down by approximately 3%, to around 123.7 trillion. Currently, the average block time stands at 10 minutes and 20 seconds, slightly above the protocol’s ideal of 10 minutes. Difficulty adjustments are programmed into the Bitcoin protocol every 2,016 blocks (roughly two weeks), ensuring that the rate of block creation remains steady, even as mining power fluctuates. After a noticeable drop in June and the first half of July, when the mining difficulty slipped to 116.9 trillion , the second half of July saw a strong rebound, reflecting increased computational power from miners. Stock-to-Flow and Its Role in Bitcoin Scarcity Mining difficulty is closely tied to Bitcoin’s hashrate—the total computing power used to validate transactions and secure the network. This dynamic also plays a critical role in preserving Bitcoin’s scarcity through its stock-to-flow (S2F) ratio. The S2F model compares the existing supply of an asset to its rate of new production. A higher S2F ratio generally indicates stronger price stability and resistance to inflation through oversupply. Bitcoin’s S2F ratio is currently higher than that of gold. With about 94% of its maximum 21 million coin supply already mined, Bitcoin is becoming increasingly scarce . Gold, by comparison, has an S2F ratio of around 60 and an annual inflation rate of roughly 2%, while Bitcoin boasts a scarcity ratio of about 120, according to PlanB, the pseudonymous creator of the stock-to-flow pricing model. This makes Bitcoin nearly twice as scarce as gold, underlining its appeal as a deflationary store of value. Mining Difficulty Adjustments Keep Market Stable The mechanism of difficulty adjustment ensures that Bitcoin’s issuance remains steady regardless of sudden surges or declines in mining power. If more miners join the network, the difficulty rises to maintain the 10-minute block interval. Conversely, if miners exit due to lower profitability, the difficulty drops to stabilize block creation. This self-regulating system guards against overproduction, which could otherwise flood the market with new BTC and trigger downward price pressure. As such, the upcoming decrease in mining difficulty is part of the protocol’s built-in resilience—preserving the integrity and long-term value of the Bitcoin network. The post Bitcoin Mining Difficulty Hits Record High, But Downward Adjustment Expected appeared first on TheCoinrise.com .

Source: The Coin Rise