As the number of mining computers fighting to secure the network continues to expand, the Bitcoin mining difficulty is about to reach a new record high. At tomorrow’s bi-weekly adjustment, the BTC mining difficulty will increase from its current value of 49.55 trillion to 50.91 trillion.
Thus, the difficulty that individual miners must overcome in order to find a Bitcoin block has increased by more than 2.7%. The increase in mining difficulty is due to the average block time now being 9.73 minutes, which is faster than the Bitcoin protocol’s target of maintaining a block time of about 10 minutes by 0.27 minutes.
The Bitcoin protocol “will adjust the difficulty up or down when the average observed block intervals are shorter or longer (than 10 minutes), respectively,” according to cryptocurrency on-chain data analytic company Glass node.
This month’s increase in Bitcoin network fees has given mining profitability a welcome boost. Miners now receive a portion of network fees in addition to newly created BTC tokens for each block they successfully mine.
Bitcoin block chain
An explosion of activity on the Bitcoin block chain connected to the Ordinals protocol is the cause of the fee increase, which has admittedly subsided in recent weeks but has remained at abnormal levels.
The Bitcoin block chain has been hailed for gaining significant functionality thanks to the Ordinals protocol, which developed the idea of inscriptions straight onto the foundation chain.
Now that NFTs and so-called BRC-20 tokens may be issued straight onto the Bitcoin blockchain, decentralized apps backed by smart contracts are beginning to appear.
The need for inscriptions, which are counted as transactions, has led to a rise in demand for Bitcoin network block space. Bitcoin appears to be in the early stages of evolving into a smart chain (like Ethereum). The BRC-20 token standard and the Ordinals protocol were just introduced during the past two months, respectively. In fact, it appears that the Bitcoin block-chain’s innovation has just begun to take off.
This implies that for the foreseeable future, transaction numbers will, at the very least, continue to be inflated above last year’s pre-Bitcoin Ordinals protocol levels.And as a result, it follows that Bitcoin network fees will probably continue to be high, providing a significant incentive for new miners to join the network. Beyond the daily changes in the price of Bitcoin, the upcoming block reward halving, which will reduce the block reward from the current 6.25 BTC to 3.125 BTC, is the biggest source of worry for miners. That would discourage new miners from joining the industry out of concern that the payout might be cut in half, rendering the endeavor unprofitable.
Bitcoin mining is the process of producing a cryptography solution that satisfies predetermined criteria in order to validate the data included in a block chain block. A reward in the form of bitcoin and charges for the labor completed are awarded to the miner who arrives at the correct solution first when one is found.
The compensation for mining bitcoin decreases over time. Up until there are 21 million bitcoins in circulation, this reward procedure keeps going. When that threshold is reached, the bitcoin reward will stop, and miners will instead be compensated through fees for their labor.
In order to mine bitcoins, a mining program must create a random hash and add a second number to it, known as the nonce, or “number used once.” This value always starts at zero when a miner starts. Every time, the nonce is altered by one; first, it is 0, then it is 1, then 2, and so on. The attempt fails, and the miner attempts again if the hash and nonce produced by the miner are greater than the target hash established by the network.
This is done by each miner on the network up until a hash and nonce pair is produced that is lower or equal to the target hash. The award and fees are paid to the first person to accomplish that goal, and a new block is then created. The block is closed, encrypted, and mined after it has around one megabyte of data.
The Bitcoin network consists of thousands of machines that mine continuously. They are all vying for first place because the mining award is given to the one who solves the issue first. Because they needed greater processing capacity to boost their odds of winning, miners formed pools to get an advantage over other miners.