Bitcoin miners are about to face another tough challenge in a market that has been going downhill for months. The difficulty of mining a Bitcoin block is going to see another big spike early next week.
The metric automatically adjusts to keep the time it takes to mine a bitcoin block to around 10 minutes, depending on the network hashrate. That is the amount of computing power committed to mining and secure the Bitcoin blockchain. The higher this hashrate, the higher the difficulty, which will reduce the profitability of the miners.
If Bitcoin is already expensive to mine, it will soon be even more so
The network hashrate is currently at its highest point in its history, close to 250 exahash per second. The existence of more efficient mining rigs and colder weather with the end of summer in the northern hemisphere are some of the reasons for this strong increase in hashrate. There are also lower energy costs in the US and the reallocation of mining capacity previously earmarked for ETH mining after his move to Proof of Stake.
Currently, the block time of the bitcoin mining network is close to 9 minutes, faster than the expected 10 minutes to maintain its stability. Although there is still more time until the next adjustment, Difficulty expected to increase more than 10% from the current 31,36 billion, being able to reach an all-time high, according to the data. The hashrate has been on the rise since August, as North American miners began ramping up production ahead of the colder months. Earlier this summer, miners across the United States and in industry powerhouse Texas scaled back operations to cope with heat waves, helping to reduce network hashrate and difficulty.
The bear market has seen profit margins shrink as bitcoin prices plunged more than 50% this year while energy prices rose. Shares of publicly traded bitcoin miners have fallen more than 70% this year, on average, according to data from FactSet. The pain is likely to be compounded for the industry by the increased network hashrate and difficulty.
It is believed that while the weakest miners will fall, survivors will thrive. Miners with higher energy costs, less efficient or leveraged operations have underperformed, while stronger ones are poised to thrive, according to cryptocurrency market analysts.
