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Bitcoin mining difficulty adjustment

Bitcoin miners are not giving up: Hashrate increases despite profitability drop

Analyzing the effects of difficulty on Bitcoin mining profitability

The latest difficulty adjustment, effective at block height 739,872, reduced mining difficulty by 1.29%. 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 739,872, mined on June 8. Total hashrate at the time of the adjustment averaged 216.54 EH/s.

Hashrate was 1.22% lower than the 213.92 EH/s from the last change.

As a result, difficulty rose 1.29% from 29.9T to 30.28T. This is the second time in history that mining difficulty has risen past 30T.

This comes as a sign of persistence from miners, who have seen their profitability and revenue crawl over 2-year minimums for a couple of weeks now.

It also remarks the 210–225 EH range as a balance point for hashrate, at least in the short term. Of the last 5 difficulty adjustments, 3 were increases and 2 were drops — all within that range.

Difficulty adjustment effects on Bitcoin mining profitability

With difficulty staying around 30T, profitability over the last few months has been following price action closely.

That said, with bitcoin moving back and forth within the $28–32K range, the same thing has happened with profitability.

As a result, hashprice remained stable at $0.12. The good news for miners is that total daily revenue increased 14.8%, reaching $28.7M on average. This often happens when BTC rallies shortly after an adjustment and price outweighs the difficulty increase.

Implications of the latest difficulty adjustment

Those expecting miners’ capitulation will have to wait a bit longer. For now, they keep showing resilience and coming back from every hashrate drop.

However, unless bitcoin resumes its bullish run, this will be difficult to sustain in the long term. There’s a significant amount of hashrate “pending” to enter the network, which will drive profitability further down. Only an increase in bitcoin price can counteract that negative effect to bring revenue back up.

This isn’t only a desirable situation. For some miners, it’s necessary. Many mining organizations have contracted debt to acquire more hashrate and expand their operations, borrowing against their inventory. If numbers don’t go up, they may start to face liquidations or need to seek other solutions, like refinancing or mergers and acquisitions.

This would have a tremendous impact on the current mining industry landscape, transforming it completely. Some miners may not survive, while others — those with an effective treasury management and long-term strategy — may come out on top and stronger than ever.

TL;DR:

  • Difficulty adjustment block height: 739,872
  • Date of the adjustment: 06/08/2022
  • Average hashrate at the time of the adjustment: 216.54 EH/s.
  • Previous difficulty: 29.9T
  • Current difficulty: 30.28T
  • Difficulty change: +1.29%
  • Miner revenue per hash per second (hashprice) after adjustment: $0.12

About Titan

Titan provides powerful services for crypto mining at scale, including the first enterprise-grade mining pool. Titan is also the builder of the Lumerin Protocol, a peer-to-peer, open-source solution that makes crypto mining hashpower a tradable, liquid financial asset, unlocking mining profitability and providing greater access to capital.

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