Bitcoin Miners Are Mining As Fast As They CanBy Andy Hao
One of the most elegant features of Satoshi Nakamoto’s design for Bitcoin was the algorithm that periodically adjusted Bitcoin mining difficulty. It’s responsible for ensuring that the supply of new Bitcoins entering the market remains relatively constant, almost regardless of the demand for those coins.
Every two weeks, Bitcoin mining difficulty readjusts to factor in new miner hashpower and to remain closely tied to the ten-minutes-per-block mark that was described in the original whitepaper.
This is actually the first time we’ve ever had a currency with these properties. Even the amount of gold mined around the world has continued to grow over the last 100 years, despite being characterized as a ‘scarce’ asset.
It’s this very property of scarcity that has contributed to the last 3-4 bubbles during Bitcoin’s short history. As demand ebbs and flows while supply remains relatively constant, prices swing up and down wildly.
But even the algorithm that keeps Bitcoin supply in a constant state isn’t perfect. Sometimes the urge to mine new Bitcoin is so strong that even Bitcoin’s difficulty adjustment struggles to keep pace. That is exactly what’s happening now, just like in the bull runs of 2017 and 2013.
The number of blocks mined per day has averaged over 170 this week (a byproduct of hashrate being at an all-time high), marking the highest weekly average of blocks mined per day since January 2018. At a pace of one block every ten minutes, roughly 144 blocks per day should be mined. But the fact that blocks continue to be mined faster and faster highlights the current level of urgency in the market.
Less than one year remains before Bitcoin’s block reward halves, and when that fact is combined with rising prices, it begins to make sense that miners are becoming desperate to win blocks.
The fear of missing out on Bitcoin is very real for the average investor. That’s even more true for the miners who have sunk millions of dollars into their quickly-depreciating equipment.