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Bitcoin mining difficulty adjustment overview

New all-time high! Bitcoin mining difficulty keeps climbing despite falling price

The latest adjustment, effective at block height 723,744, increased mining difficulty by 4.78%. In this overview, we’ll analyze the effects this has on mining and profitability.

Bitcoin’s difficulty adjustment in numbers

The latest difficulty adjustment occurred at block height 723,744, mined on February 17. Bitcoin’s hashrate at the time of the adjustment averaged 200.19 EH/s — a new all-time high for difficulty adjustments.

As a result, difficulty increased 4.78% from 26.69T to 27.97T. This adjustment means Bitcoin mining difficulty has now achieved a new maximum. In other words, finding a block has never been more demanding, and the Bitcoin network has never been more secure.

Difficulty adjustment effects on profitability

Besides electricity price — specific to each miner — , Bitcoin mining profitability is a result of two factors::

  • Mining difficulty, which follows hashrate and determines how hard it is to find a block — or how much power is required.
  • Bitcoin’s price, which establishes the dollar value of the mining rewards.

The latest difficulty adjustment increased difficulty during a downward price trend, which means that both factors behaved to decrease profitability. The combination of harder-to-find blocks and dropping price means that miners have to spend more in power to earn less in return.

As a result, Bitcoin mining profitability has decreased significantly. Last week, when bitcoin suddenly surged to $44,000, hashprice — a metric determining the amount of US dollars miners make for each hash they produce per second — recovered to $0.21.

However, after the difficulty adjustment, it fell back to $0.17 and is now hovering around yearly lows.

Closing thoughts

Hashrate’s growth during a price correction has two ways to look at it. On a positive note, it means that miners are committed to providing security to the network even at lower revenue.

Nevertheless, the reduced profitability resulting from the increasing difficulty parallel to the dropping price can exclude small and retail miners with lower profit margins or higher electricity prices.

As we always say, it’s crucial for Bitcoin’s security to keep incentives high and mining affordable to avoid hashrate centralization. Without signs of hashrate — and difficulty — slowing down, mining profitability relies on bitcoin’s price increasing to keep climbing.

However, we believe that the Lumerin Protocol will help improve mining profitability regardless of price. By effectively commoditizing hashrate, we aim to enable miners to unlock the full potential of their computing power.

Read more about Lumerin and what we’re trying to solve in our articles below:

TL;DR:

  • Difficulty adjustment block height: 723,744
  • Date of the adjustment: 02/17/2022
  • Average hashrate at the time of the adjustment: 200.19 EH/s (ATH)
  • Previous difficulty: 26.69T
  • Current difficulty: 27.97T (ATH)
  • Difficulty change: +4.78%
  • Miner revenue per hash per second (hashprice) after adjustment: $0.17

Did you like this article?

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