This week, Bitcoin (BTC) mining difficulty reached a historic high of 1.276 trillion, but is expected to decrease in the difficulty adjustment on August 9.
According to CoinWarz, the difficulty is expected to decrease by about 3% during the next adjustment, down to 1.237 trillion. The current average block time is about 10 minutes and 20 seconds.
CryptoQuant's data shows that mining difficulty decreased in June, dropping to 1.169 trillion at the end of the month and early July. However, in the second half of July, the difficulty level resumed its long-term upward trend.
The mining difficulty of Bitcoin and the network hash rate—the total computational power used to secure the network—are important factors for miner profitability and the high stock-to-flow ratio of Bitcoin, preventing BTC prices from fluctuating due to overproduction.
Related: A single Bitcoin miner received a $373,000 block reward.
Bitcoin's difficulty adjustment prevents prices from being affected by excessive production, maintaining a balance between mining computational power and output.
"The scarcity of gold has a stock-to-flow ratio of about 60, while Bitcoin's is about 120, so Bitcoin's scarcity is twice that of gold," said PlanB, creator of the Bitcoin stock-to-flow price analysis model.
As more computational power is used to secure the Bitcoin network, the difficulty rises accordingly to match the new computational resources, ensuring that block generation stays close to the target of about 10 minutes. Conversely, if computational power decreases, the network difficulty will be lowered to ensure that new blocks are mined at a stable rate of about 10 minutes.
