BITCOIN MINING DIFFICULTY HITS ALL-TIME HIGH AS SECOND TAPROOT SIGNALING PERIOD BEGINS

The start of a new Bitcoin difficulty adjustment window brought a major increase and a new Taproot signaling period with 63% green blocks.

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Bitcoin mining difficulty hit an all-time high after increasing by 21.5% today, according to data from Glassnode. It was the largest single-day percentage increase in a difficulty adjustment in almost seven years.

In mid-April, the Bitcoin mining hash rate dropped by roughly 25% after some miners went offline due to blackouts in China. The drop in hash rate caused the self-regulating Bitcoin mining difficulty to decrease in its subsequent difficulty adjustment. That was necessary because, with fewer miners online, less hash rate was being employed on the network, and blocks took much longer than the 10-minute mining interval target, per Glassnode data.

As miners started getting back online in the last couple of weeks, the network’s hash rate increased simultaneously. With increased hash rate and the same difficulty, blocks started getting mined in eight minutes on average last week, well below the 10-minute target.

NEW TAPROOT SIGNALING PERIOD BEGINS

After the newest Bitcoin Core software release, the difficulty adjustment window of 2,016 blocks (roughly two weeks) also serves as Taproot’s activation signaling epoch. Taproot gets locked in as a protocol upgrade for November if 90% of blocks mined signal readiness during a signaling period between May and August.

The soft fork’s first signaling epoch has just ended, marked by the increased mining difficulty in Bitcoin’s difficulty adjustment today. Although more than 70% of the network’s hash rate is already signaling readiness, only 40% of blocks had signaled “green” during the last epoch, according to Taproot.watch.

A new Taproot signaling epoch has just begun, and per Taproot.watch, 63% of blocks have signaled readiness at the time of writing. Bringing essential improvements to the Bitcoin base layer, the soft fork is highly anticipated by Bitcoiners, and miners now have five epochs left for Taproot to be activated in November.

If activated, the upgrade will pave the way for further improvements to be implemented in multi-signature wallets, the Lightning Network and other types of smart contracts that can be deployed on the Bitcoin blockchain. Other benefits of Taproot include increased privacy and cheaper complex transactions.