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Bitcoin difficulty jumps 8.33% as hashrate reaches new all-time high

The latest adjustment, effective at block height 713,664, increased the difficulty of finding a block once again. In this overview, we’ll analyze the effects this has on mining and profitability.

New hashrate all time-high

Hashrate has fully recovered. Six months after the Chinese crackdown on mining that forced half the miners to go offline, Bitcoin and surpassed previous hashrate levels.

According to Blockchain.com, the total hashpower mining on the Bitcoin network reached 181.774M TH/s.

This increase in hashrate comes as great news for the network. It means that the network is more secure than ever before: the more computing power Bitcoin has, the greater its security and overall resistance to a potential attack.

Nevertheless, the rise in hashrate also has its drawbacks related to difficulty and mining profitability.

Hashrate has surpassed previous all-time highs (Source: Blockchain.com).

Bitcoin’s difficulty adjustment in numbers

The latest difficulty adjustment occurred at block height 711,648, mined on Saturday, December 11. The hashrate at the time of the adjustment was 172.45 EH/s — 7.90% higher than the 159.81 EH/s from the previous difficulty change.

After the adjustment, difficulty rose 8.33% from 22.34T to 24.20T.

This jump marks a quick recovery and a continuation of a growing trend, which was briefly interrupted by the difficulty decrease from the previous adjustment.

Bitcoin mining difficulty (Source: Coin Metrics).

Since we’re now at unprecedented hashrate levels, only time will tell where the network finds its profitability balance point that stops the growing hashrate. Bitcoin’s price action will be a determinant factor in that matter.

For now, let’s see how this latest change affected miners’ revenue.

Difficulty adjustment effects on profitability

With Bitcoin unable to break past the $50K resistance line, the 8.33% jump in difficulty comes as unpleasant news for miners.

Over the last few months, profitability has held high despite the increasing difficulty thanks to price action accompanying its growth.

Now, with difficulty this high and price remaining stagnant, miners are seeing their revenue drop consistently both in fiat currency and BTC.

Bitcoin mining revenue per hash per second, also known as hashprice (Source: Coin Metrics).

As you can see in the chart above, hashprice has consistently dropped since October. The price of each hash is now $0.26. It hasn’t been this low since June, when Bitcoin crashed on China’s crackdown news.

Hashprice is a metric that determines the amount of money — in US dollars — miners earn for each hash per second.

Logically, miners are also earning less bitcoin. The hashrate all-time high also means that miners’ revenue in BTC is the lowest it has ever been.

Bitcoin mining revenue in BTC (Source: Coin Metrics).

Closing thoughts

It would seem that the mining bonanza period miners have enjoyed over the last couple of months is coming to an end — if it isn’t over already.

There’s a couple of scenarios that could play out in favor of miners, like:

  • First, the decreasing mining profitability could discourage new individuals from starting mining, slowing down hashrate growth, and thus, the drop in revenue. Nevertheless, due to the level of institutional interest in mining, that seems unlikely in the short term.
  • Bitcoin could recover bullish momentum, driving price upwards, and with it, mining profitability.

However, the positive aspects of the difficulty increase far outweigh the drop in revenue.

As we mentioned, the increasing hashrate improves Bitcoin’s security and protects it against any attack attempts.

Most importantly, having recovered from an event of the magnitude of losing more than half the total miners overnight in only a few months shows the resilience and strength of the community.

Indeed, whether price goes up or down, Bitcoin has proven one of the community’s favorite sayings: “Bitcoin is never down.”

Did you like this story?

We publish a mining difficulty overview after each adjustment. Make sure to follow us on Medium for more exclusive content every week. You can also subscribe to our blog and sign up for our weekly newsletter. We’ll be glad to have you!

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An extensive library of newsworthy, analytical, and educational content regarding cryptocurrency and crypto mining. By Lumerin Protocol, built by Titan Mining.

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Lumerin Protocol

Lumerin Protocol

Making crypto mining hashpower a tradeable commodity. Built by Titan Mining. Visit us on https://lumerin.io/.

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