| 18 May 2024, Saturday |

Bitcoin Mining Difficulty Takes Another Large Step Up, As Miners Reposition

On Wednesday, Bitcoin mining difficulty has just jumped once again, for the third time in a row, forming a new increase streak, as previously discussed.

Bitcoin mining difficulty, or the measure of how hard it is to compete for mining rewards, jumped by 13.24%, reaching 17.6 T. This is the highest increase since May this year, and a significant jump from the 15.56 T, reached during the previous adjustment two weeks ago. It’s also notable when compared to the 13.67 T level it had seen during the last drop, in mid-July.

The number it hit today brought it back to the November 2020 level – slowly moving towards the all-time high of 25 T seen this past May, though still quite far from it.

This is now the third jump in a row, following the second longest drop streak in the network’s history.

All this comes with the rise of BTC’s price, which had recently surpassed USD 50,000 again, before correcting lower.

Per, hashrate, or the computational power of the network, continues increasing. The 7-day moving average hashrate on July 24 was up 50.4% since the July low. It’s also up 11.7% since the previous adjustment.

Meanwhile, though seeing some minor increases over the past two weeks, bitcoin mining profitability has remained the same since the previous difficulty adjustment.

The mining difficulty of Bitcoin is adjusted around every two weeks (or every 2016 blocks, to be precise) to maintain the normal 10-minute block time. The 7-day simple moving average block time on August 24 was 8.99 minutes.

Furthermore, according to ByteTree, in the past week, miners have spent more of their newly generated BTC than what they’ve held – though the opposite can be said for the weeks leading up to it.

At 14:42 UTC on Wednesday, BTC is trading at USD 47,992. It’s down 0.9% in a day and is up 8.3% in a week.

The average hash rate has made a significant recovery as Chinese miners who have had to leave the country due to regulatory crackdowns are migrating and rejoining the network. According to data from analytics provider CryptoQuant, the hash rate on August 24 went up to 152 EH/s from a year-to-date low of 52 EH/s seen on June 28.

The crypto mining migrations are taking their toll: one mining company migrating from China to North America is Bit Digital, which owned 32,500 miners as of June 30, 2021. On the same date, they had had close to 30% of their mining fleet still remaining in China—while close to 9,500 miners were expected to complete the migration within the third quarter of this year.

Before the crackdown, miners in China made up half of all global miners, but the recent turn of events has opened new opportunities to miners elsewhere, many argued. Shane Downey, chief financial officer of Hut 8 Mining, told the Financial Times, “Think of the average daily global bitcoin production as the pie. The size of the pie remained the same, and every existing miner could help themselves to a bigger piece.”

Another company on the move is The9, planning to take their mining business to Kazakhstan—significantly closer, in a geographical manner. The total capacity of their new facility is expected to be 200 megawatts and will accommodate over 50,000 S19 Antminer devices for a total of around 5 EH/s hash power. Half of the capacity is expected to be available by the end of this year, while the deadline for the remaining 100 MW is the end of 2022.

The increase in hash rate could indicate that miners are settling down again, resulting in these recent increases in difficulty. While the formerly Chinese miners are still finding their feet, those based in other countries are definitely helping themselves to bigger pieces of the proverbial cake, as US-based Riot Blockchain reported a record-setting second quarter with a 1,540% year-over-year increase in profits.