Bitcoin’s mining difficulty recently surged by 6.24% to an unprecedented level of 101.65 trillion, setting a new milestone for the network. This surpasses the previous record of 92.7 trillion in September and 90.67 trillion in July.
Details of Recent Bitcoin Mining Difficulty
According to data from blockchain explorer Mempool, the recent Bitcoin difficulty adjustment came at block 868,896, reaching a record of 101.65 trillion. Bitcoin mining difficulty measures how difficult it is to solve the complex cryptographic puzzles used for mining.
The Bitcoin network’s mining difficulty is adjusted automatically after 2,016 blocks have been mined. This process automatically adjusts every two weeks to maintain an average block creation time of 10 minutes. Notably, the number of miners in the network determines how difficult it is to mine additional units over time.
Also, the difficulty of mining Bitcoin increases when the number of miners on the network increases. On the contrary, the mining difficulty decreases when fewer miners compete to find new blocks. The latest positive adjustment comes at the Bitcoin network’s seven-day moving average hash rate reached a record high of 755 EH/s ahead of the difficulty adjustment.
Effect on Smaller Miners
This spike in rate reflects the increase in mining activity and investment in mining infrastructure.
However, as Bitcoin becomes harder to mine, it increases security and creates financial challenges for smaller miners. Mining costs a lot in terms of energy and equipment. As such, smaller operations earn fewer rewards while facing the same costs.
In contrast, larger mining companies often have better hardware and access to cheaper energy sources. This gives them an advantage, allowing them to operate more efficiently and stay profitable even when mining becomes tougher. In a recent evaluation of the crypto mining sector, Bernstein, a research brokerage firm, indicated that some companies can surpass market expectations and deliver returns for investors.
Bitcoin Mining Profits Plummet to Record Lows
In September, Bitcoin mining profitability reached a new low. According to JPMorgan’s research report, BTC miners earned an average of $43,600 EH/s in daily block reward revenue in August. This figure contrasts the peak of $342,000 per EH/s in November 2021, when BTC traded at $60,000, and the network hashrate was lower at 161 EH/s.
Rising network hashrate is one of the key factors contributing to reduced profitability. The network hashrate averaged 631 EH/s in August, an increase of 16 EH/s from the previous month and 20 EH/s below the level seen before the halving event.
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