Today, the bitcoin network mining difficulty increased by 1.3% after falling by approximately 5% two weeks ago. That previous decline represented the biggest drop in mining difficulty since July of 2021 when miners were forced to close shop and exit China. The network's hash rate has increased by about 2.25% from late May.
The mining difficulty is a measure of how difficult it is to mine a block on the Bitcoin blockchain. A high difficulty means it takes additional computing power to verify transactions entered on a blockchain (the process is called mining). Adjustment of the mining difficulty occurs every 2,016 blocks (every two weeks) in sync with the network's hash rate.
Mining difficulty has been steadily going up since July 2021
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The mining industry is crucial in the Bitcoin economy and they operate on very slim margins. Mining difficulty and hash rate is an extremely important gauge of miner sentiment. Mining profitability can force miners who reach their break-even mining price out of the market because of high operational costs. Miners in stronger financial positions, who remain active on the network, will subsequently gain in relative share of hash-power. These remaining miners will have a larger share of the income, mined for the same fixed costs, and therefore can liquidate fewer coins and begin building reserves.