Bitcoin: a new record for mining difficulty
Bitcoin: a new record for mining difficulty
Mining

Bitcoin: a new record for mining difficulty

By Marco Cavicchioli - 25 Jan 2022

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Bitcoin mining difficulty has reached its all-time high. 

In fact, a few days ago, it rose to over 26.6TH/s, which is the highest value ever

Record for the difficulty of Bitcoin mining

Suffice it to say that at the end of 2020, it was at 18.6TH/s, and at the beginning of 2019, it was below 6TH/s. So in three years, it has more than quadrupled. 

The cause is the continued increase in hashrate, which is again back near all-time highs. In fact, the more the hashrate increases, the more the speed with which blocks can be mined increases, bringing down the block time. That’s the average time between the addition of a block to the Bitcoin blockchain and the addition of the next one. 

The Bitcoin protocol is designed to always maintain a block time of about 10 minutes, so when the hashrate increases, the difficulty of mining must necessarily increase as well so as to compensate for the increased speed of mining the hashes that validate the blocks. 

The absolute historical record of hashrate was touched a few days ago, so it is inevitable that the difficulty is at the maximum. It should also be kept in mind that the difficulty is updated only every two weeks. 

To tell the truth, hashrate levels similar to the current ones already occurred in May 2021, before the Chinese ban, and in fact, already then the difficulty recorded new highs rising for the first time in history above 25TH/s. But at that time, the price of BTC was around $50,000, not $35,000 as now. 

Bitcoin mining
Bitcoin’s hashrate is at record highs

Bitcoin’s profitability plummets

In fact, in recent weeks, there has been a real collapse in the profitability of Bitcoin mining. 

In May 2021, it was just under $0.4 per THash/s per day, which then rose to $0.45 during the price spike on November 10. Now it has plummeted below $0.2, foreshadowing that if BTC’s value doesn’t go up, it will most likely be the hashrate that needs to go down. 

In fact, more hashrate means more power consumption, i.e., more costs. Since the remuneration of the miner is in BTC and not in dollars, when the value of BTC goes down, the profitability of mining also goes down, inducing the miner to turn off the machines that consume more. 

It should also be noted that in recent years the efficiency of ASICs used to mine Bitcoin has increased a lot, so even if they have a higher hashrate, the new models consume much less than the previous ones. For this reason, it is possible to have a very high hashrate even with a lower value of BTC. 

However, the hashrate will likely end up decreasing, forcing the protocol to make abrupt adjustments to the difficulty causing it to decrease even relatively much. 

At the moment, it seems reasonable to imagine that in the coming weeks, hashrate and difficulty may drop considerably. 

 

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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