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Bitcoin mining difficulty adjustment

Bitcoin mining difficulty barely moves as miner’s refuse to capitulate

Analyzing Bitcoin’s difficulty adjustment and mining profitability

The latest difficulty adjustment, effective at block height 743,904, reduced mining difficulty by 1.41%. In this overview, we’ll analyze the effects on mining and profitability.

Bitcoin’s difficulty adjustment in numbers

The latest difficulty adjustment occurred at block height 743,904, mined on July 6. Total hashrate at the time of the adjustment averaged 208.52 EH/s.

Hashrate was 1.47% lower than the 211.63 EH/s from the last change.

As a result, difficulty dropped 1.41% from 29.57T to 29.15T. This constitutes the second drop in the last three adjustments.

With bitcoin’s price still hovering around the $20K line, hashrate remains stagnant as miners wheather the storm by liquidating their inventory.

So far, we haven’t seen the miner capitulation many are expecting and, although we’re seeing a consistent decrease in hashrate, it’s still small considering the market conditions.

The chart below shows how miners are still running their ASICs despite the reduced profitability. Since the start of the year, despite a 68% drop in miner revenue per TH/s, hashrate increased 20%.

However, if you focus on the right end of the chart, you can see hashrate has practically stopped its growth after bitcoin’s most recent crash below $20K. This indicates that the recent price action has pushed many miners to their limits, forcing them to disconnect their ASICs to avoid mining at a loss.

The difficulty adjustment and Bitcoin mining profitability

With hashrate staying stagnant while price swings across the $18–22K range, difficulty hardly has an impact on profitability. Adjustments are too small to have any real effect on revenue, which practically mimics bitcoin’s price action as a result.

This is easily noticeable when comparing price movements and miner revenue per TH/s over the last few weeks. As you can see, the variations between one and the other keep getting smaller, meaning that profitability is being determined exclusively by price action and not so much by difficulty changes.

As a result, it’s likely that mining profitability will oscillate between $0.07 and $0.11 as it follows bitcoin’s price across its range.

Implications of the latest difficulty adjustment

Bitcoin has found relative stability between the $18K support and $22K resistance, at least for now.

At the same time, these levels also seem to be a balance point for miners in terms of profitability and costs, evidenced on hashrate’s stagnancy and minimal difficulty changes.

That said, it’s probable that this situation of relative calm will perpetuate until we see bitcoin breaking out of the range — whether up or downwards. Until then, many miners will have to keep liquidating most of their coins to stay profitable.

TL;DR:

  • Difficulty adjustment block height: 743,904
  • Date of the adjustment: 07/06/2022
  • Average hashrate at the time of the adjustment: 208.52 EH/s
  • Previous difficulty: 29.57T
  • Current difficulty: 29.15T
  • Difficulty change: -1.41%
  • Miner revenue per TH/s (hashprice) after adjustment: $0.09

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