Following yet another adjustment of the mining difficulty on the Bitcoin network, a remarkable new benchmark has been achieved, with a difficulty rating of 46.84 T.
This marks the third consecutive surge in difficulty, with significant implications for all those involved in the mining process. In the following discussion, we will delve into what these developments mean for miners and the wider Bitcoin community.
Bitcoin mining
In a historic development, the mining difficulty of Bitcoin has surpassed 45 T (trillion) for the first time, and industry experts predict that it could climb even higher, reaching 48.8 T after the next recalculation.
This marks the fourth consecutive surge in difficulty, following a trend that has been observed since the beginning of 2023. Notably, the last significant decline in difficulty was witnessed in December 2022, when the indicator failed to even reach 40T.
At present, the complexity of Bitcoin mining is at an all-time high, with the number of blocks before the next recalculation being tracked in real-time using the Bits.media tools.
As a rule, the difficulty is recalculated every 2016 blocks, or roughly every two weeks, with the average time to find a new block on the network being 10 minutes.
An increase in computing power and block search speed leads to an upward recalculation in difficulty, while a decrease in computing power and an increase in the search interval for a block results in a downward adjustment.
Despite the challenges posed by the recent crypto winter, depreciation, and financial difficulties faced by some industry players, miners are still flocking to the Bitcoin network, evidenced by the current mining hashrate of over 360 exahash/sec.
The efficiency of modern equipment is largely responsible for maintaining a near-constant block time of 10 minutes. However, there have been deviations from this figure, with the most significant being on March 23, when the block time dropped to 7.87 minutes.
In analyzing the state of the network, it is vital to take into account the current Bitcoin mining hashrate and the dynamics of changes in real-time.
This indicator appears to correlate with changes in network complexity, indicating that miners continue to use increasingly greater computing power in the Bitcoin network, despite the difficulties faced by some players in the industry.
Challenges for miners
The increase in mining difficulty in the Bitcoin network has posed several challenges for miners, according to experts such as Cryptonomist.
One significant issue is that the more challenging the mining process becomes, the more energy it requires.
This is because mining involves a large number of hash function calculations to confirm the block, with each confirmation earning a reward of 6.25 BTC.
Undoubtedly, this process consumes a vast amount of electricity. However, the release of new, more energy-efficient ASIC solutions and the development of new technological processes for these devices have resulted in a decrease in energy consumption per equipment unit.
As a result, it is now possible to process the same number of hash functions with less energy, thus balancing out some of the costs incurred due to the complexity of mining.
Despite these developments, competition among miners remains fierce, and the likelihood of a successful block search (and thus, potential income with an equal BTC rate) for an individual miner is reduced.
Cryptonomist experts have corroborated this observation, citing statistics indicating that the hashrate has increased by roughly seven times over the past seven years, while the network’s power consumption has only doubled. Nonetheless, the BTC mining energy consumption index has remained relatively stable.
Hash rate
Hash rate refers to the computing power dedicated to mining cryptocurrencies, such as Bitcoin. It plays a crucial role in determining the difficulty level of the mining process.
When the block search time is low, the complexity increases, and when the hashrate is high, the complexity decreases.
Miners compete to obtain as much hashrate as possible to increase their chances of mining a block. They often join forces in mining pools to share their resources and earnings.
However, the profitability of mining is not always guaranteed, as it depends on the market value of the cryptocurrency being mined.
The actual profit from mining can vary significantly depending on the price of the cryptocurrency at the time of conversion. For example, converting 6.25 BTC to fiat currency when Bitcoin is worth $69,000 is different from converting it when it’s worth only $23,000.
Currently, the difficulty level is at an all-time high, while the BTC market value is over 60% below its all-time high. As a result, miners’ incomes have reached lows similar to those seen at the end of last year, coinciding with local lows of the exchange rate. This has made 2022 the worst year for Bitcoin mining.
Despite this, the high hash rate and record difficulty level may indicate an increase in miners’ interest in Bitcoin as a long-term asset, as the momentary profit-taking, considering all costs, is debatable.
Such interest can potentially lead to an increase in the cost of mining new coins, and the bet of individual players on the long-term prospects and the holding strategy can be considered as one of the possible signals for further growth in the rate.
It’s worth noting that the information presented in this text does not constitute investment advice, and the opinions of the editors may differ from those of the author, analytical portals, and experts.