The difficulty of mining Bitcoin (BTC) surged this week to an all-time high of 127.6 trillion, highlighting the network’s growing computing power. However, a downward adjustment is expected on August 9th, with Coinwarz data showing forecasts that would be about 3% down by about 3%, down by 123.7 trillion.
Currently, the average block time is approximately 10 minutes 12 seconds, slightly above the protocol’s 10 minute target. Adjusting difficulty helps to regain this time by responding to changes in total computing power dedicated to mining, or hashrate.
Encrypted data shows that mining difficulties have declined throughout June, reaching a low of 116.9 trillion in early July. However, this trend reversed in late July, resuming a long-term upward trajectory linked to an increase in mining work.
The rising stock-flow ratio of Bitcoin indicates an increase in rarity
The difficulty of Bitcoin mining measures how difficult it is for miners to find a valid hash for the next block. Regardless of the network hashrate change, adjust every 2,016 blocks every 2 weeks to maintain a stable block time of approximately 10 minutes.
As the difficulty level increases, mining becomes more expensive and profitable, unless BTC prices rise too. On the other hand, the reduced difficulty provides short-term relief to miners by facilitating rewards with the same equipment.
Mining difficulty and network hashrate are important not only for security, but also for maintaining Bitcoin Inventory to flow ratio– An important measure of rarity. This ratio compares the existing supply of assets to the new supply rate that enters the market.
A high inventory-to-flow ratio indicates that new production has minimal impact on overall supply and helps maintain price stability. The BTC stock-flow ratio is currently higher than the gold ratio, and according to Planb, an analyst who developed the inter-stock pricing model, it was “twice less.” With about 94% of the 21 million btc capped, Bitcoin boasts an estimated stock-to-flow ratio compared to the gold 60.
In contrast, silver has historically been a protest because it has a much lower inventory-to-flow ratio. As silver prices rise, more supply floods the market and pushes prices down. The phenomenon Bitcoin is designed to resist.
Bitcoin’s self-regulation difficulty stabilizes block production and makes supply predictable
Bitcoin’s protocol includes automatic difficulty adjustments approximately every two weeks. As more miners join the network and the hashrate increases, mining becomes more difficult and slows down block production until the difficulty level is adjusted. The opposite happens when the hashrate drops. It is difficult to keep the average block interval close to 10 minutes.
This mechanism will keep BTC issuance predictable and avoid sudden supply shocks that can cause market volatility. By adjusting the difficulty of matching available computing resources, the protocol maintains the inelasticity of assets to production, one of the key attributes that underpin Bitcoin’s value proposition as “digital gold.”
When Kimchi Premium comes back, bitcoin slips
Bitcoin prices are under pressure as mining difficulties prepare for potential declines. Bitcoin slid over 3% and bounced after hitting an intraday low of $112,680. By 7:30pm, the BTC was $113,375. Korea has once again become a premium – $113,987, 0.84% higher than the global average.
This premium often means an increase in domestic demand or region-specific regulatory issues. Despite the pullback, Bitcoin has a market share of 61.4%.