Bitcoin mining difficulty increased by 2% on Wednesday, reaching a new all-time high in the first adjustment since last week's halving event. This adjustment occurred at block height 840,672, with Bitbo data indicating a record difficulty level of 88.1 trillion. Notably, this marks the first time that Bitcoin mining difficulty has risen in the initial adjustment following a halving.

Comparatively, the initial difficulty adjustments post-halving in November 2020, July 2016, and May 2020 stood at -2%, 0%, and -6%, respectively. Subsequent adjustments were even more significant, with figures of -12%, -5%, and -9%, respectively. Historically, this trend emerged as the reduction in block subsidy rewards led to a sharp decline in miner profitability, prompting less efficient or financially prepared miners to halt operations.

Bitcoin mining difficulty is a measure of the difficulty in mining a new block relative to its lowest possible level. It automatically adjusts every 2016 blocks, roughly every two weeks, ensuring an average block discovery rate of 10 minutes regardless of the number of active miners.

What sets this adjustment apart is the sustained high level of hash rate, which measures the total computational power dedicated to the network by miners. Despite the reduction in block subsidy rewards from 6.25 BTC to 3.125 BTC, miners continue to earn additional transaction fee rewards for each block mined.

In previous halving events, transaction fee rewards were insufficient to prevent a reduction in Bitcoin's hash rate immediately afterward. However, this time, hash rate has remained near all-time highs, with data from The Block's dashboard showing an increase from a seven-day moving average of 630 EH/s before the halving to 640 EH/s in the first adjustment post-halving, fueled by miners' post-halving transaction fee rewards surge.

Following block 840,000, which generated $2.4 million in fees, surpassing the $200,000 worth of block subsidy reward, Bitcoin witnessed a record 104-block run of transaction fee rewards exceeding the subsidy. While transaction fee rewards have decreased since then, they still constitute approximately 40% of total block rewards on a seven-day moving average basis, compared to around 10% before the halving. Consequently, despite the drop in block subsidy, transaction fees now contribute to around 67% of miners' subsidy revenue, compared to around 12% pre-halving.