Bitcoin mining difficulty hits all-time high

Bitcoin’s mining difficulty reached a record high this week, climbing to 127.6 trillion, reflecting the network’s expanding computational strength and growing competition among miners. This peak, however, is expected to be short-lived: a scheduled network adjustment on August 9 is projected to reduce the difficulty by around 3%, bringing it down to 123.7 trillion. The adjustment comes as the average time to mine a new block hovers at approximately 10 minutes and 20 seconds, slightly above the protocol’s ideal ten-minute target. Difficulty is recalibrated every 2,016 blocks - roughly every two weeks, to ensure block production remains steady, regardless of changes in the total mining power.

Data from June showed a downtrend, with mining difficulty dropping to 116.9 trillion in early July, but the trend reversed by late July as miner participation increased, propelling difficulty to new highs. This cyclical adjustment mechanism is essential not just for security, but also for preserving Bitcoin’s stock-to-flow ratio—a commonly referenced measure of scarcity. With about 94% of the maximum 21 million BTC already mined, the stock-to-flow ratio now stands at 120, which analyst PlanB notes is roughly double that of gold. This high ratio indicates that Bitcoin is becoming increasingly scarce, limiting the impact of new supply on price and supporting the asset’s value proposition as “digital gold”.

Whenever difficulty rises, mining operations become costlier and less profitable for miners unless BTC’s price rises in tandem. A reduction in difficulty, on the other hand, temporarily offers miners some relief, making it easier to earn block rewards. The adjustment process helps stabilize the issuance rate, insulating Bitcoin from the supply shocks that can influence the prices of traditional commodities like silver.

The latest developments come as Bitcoin’s price dipped 3%, sliding to an intraday low of $112,680 before rebounding to $113,375 by 7:30pm ET on August 2. Notably, the “Kimchi premium” - the extra price paid for BTC on South Korean exchanges versus the global average - has returned after nearly a month. On August 2, the premium reached about 0.84%, with Bitcoin trading at $113,987 in South Korea. This premium is interpreted by many analysts as an indicator of strong local demand or region-specific trading dynamics, and is often watched as a gauge of sentiment in one of Asia’s most active crypto markets. Despite recent volatility, Bitcoin’s global market dominance remains robust at 61.4%.

Together, these adjustments and market signals highlight Bitcoin’s self-correcting protocol, its increasing scarcity, and the dynamic forces that underpin its pricing and network security.