Bitcoin mining: difficulty increased by 9.26%

The latest recent increase in Bitcoin mining difficulty was the highest since January. 

The increase occurred yesterday, and it went from 28.35T to 30.97T. 

The current level is not the highest ever, but it is not far from the all-time high of 31.25T in mid-May before the cryptocurrency markets collapsed due to the implosion of the Terra/Luna project. 

Since then the difficulty had fallen as low as 27.69T shortly after mid-July but has since returned to growth. 

This growth is in turn due to the increase in hashrate, or the total computing power used by all Bitcoin miners in the world. 

The dynamics of BTC mining hashrate in 2022 are very curious indeed. 

Hashrate values and difficulty for Bitcoin mining

After the onset of the bear market in the second half of November 2021, the hashrate continued to rise despite the halving of BTC’s value, until it hit a first high point in early May, exceeding 250 Ehash/s for the first time in history. 

With the collapse of the crypto markets in mid-May, and Bitcoin’s price descending below $30,000, the hashrate dropped slightly, to the following low point of 188 Ehash/s in early June. Thereafter, however, it immediately rose again making an all-time high on June 8, 2022, at over 253 Ehash/s. 

Due to the further decline in the price of BTC, which also fell well below $20,000 in June, the hashrate ended up falling to 170 Ehash/s in mid-July, only to rise again, so that by August 26 it had risen again to 246 Ehash/s. 

Inevitably, the difficulty dynamic follows closely, because this serves to prevent high hashrates from reducing block-time by too much, or low hashrates from diluting it too much. In fact, the Bitcoin protocol is designed to always maintain an average blocktime of around 10 minutes, no matter what may happen. 

Thus, the recent increase in difficulty is not surprising at all, while what is surprising is the increase in hashrate that occurred after the price collapses in May and June, partly because these are months when the cost of electricity increased. 

This causes the average profitability estimate to drop sharply, down to $0.08 per THash/s per day. In March it was at $0.25, while even in November 2021 it had risen to $0.45. However, both November’s $0.45 and March’s $0.25 should be considered high levels, while the current levels can be considered relatively normal. 

Ethereum mining in the run-up to the Merge

It should also be kept in mind that many Ethereum miners are preparing to quit, because after the Merge, ETH will no longer be minable, so they may be investing the capital normally used for refurbishing machines to purchase more machines to mine BTC. 

As a matter of fact, looking at the hashrate’s graphs, and difficulty, it certainly seems that Bitcoin miners see the future as rosy for them.