Bitcoin mining difficulty records a fifth consecutive increase
After plummeting ~50% from its all-time high, Bitcoin hashrate has been recovering slowly but gradually, leading to five straight increases in difficulty. Here’s all the data.
Hashrate continues its slow recovery
In April 2021, the Bitcoin network’s total hashrate reached an all-time high of 198.6M TH/s, according to CoinMetrics. Of course, this was before the Chinese crackdown on cryptocurrency mining. According to data, the country hosted more than half the total hashrate in the world.
Data seemed accurate since after the Chinese Communist Party (CCP) banned mining in the country, hashrate dropped to 57.4M TH/s, a number not seen since July 2019.
Since then, miners leaving China have been looking for a new base of operations. A move that has taken longer than expected, considering the coronavirus pandemic and the supply chain and logistics bottlenecks worldwide.
However, data show that although most of them are still to come back online, more and more miners keep returning to mine on the network, with the United States and Canada as the most popular destinations for relocation.
With great hashrate great mining difficulty
On September 21, the Bitcoin network implemented its automatic, bi-weekly mining difficulty adjustment at block height 701568. The mining difficulty was increased to 19T, recording a 3.16% rise.
This was the fifth consecutive increasing adjustment. Yet another sign that hashrate keeps its slow but steady recovery.
Remember that hashrate difficulty is a measure that determines how hard it is to mine a Bitcoin block. It adjusts automatically every 2016 blocks — roughly every two weeks — proportionally to the amount of hashrate currently working on the network. The more hashrate, the harder it becomes to find a block and vice versa.
As you can see in the chart above, after the significant fall in June — difficulty often lags about a week behind hashrate since it adjusts on a fixed term — and a two-year low a month later, difficulty has chained five consecutive increases. After the last one, Bitcoin has unwound around half the drop from the previous all-time high.
Implications for miners
Over the last few months, miners have enjoyed an unusual profitability period. This is a consequence of the coincidence of unusually low difficulty with high Bitcoin prices.
That said, it’s not surprising that as hashrate and difficulty climb up, profitability decreases proportionally. According to the available data for revenue per TH/s, mining profitability has dropped around 30% compared to last month.
Nevertheless, the good news is that it’s still high on a macro scale. Although not as in Q1 and the start of Q2, 2021, Bitcoin mining is still three times more profitable than last year, and twice as in June this year, right before the crackdown that spiked this new mining profitability season.
Even if the best moment seems to have passed, it feels like we’re far from over. It will depend mainly on Bitcoin’s ability to keep its upward trend — or at least hold its current levels — and the speed at which hashrate recovers.
So far, and if it keeps its current rate, it’s probable that we will see the mining bonanza extend at least for a couple of months.
Titan is actively working to optimize mining and make proof-of-work cryptocurrencies more accessible and democratic. If you liked this story, make sure to subscribe to our blog and sign up for our weekly newsletter. You can also visit our social media through the links below. We’ll be glad to have you!
