Despite the fact that the currency is currently going on several consecutive months for its token price, going from nearly $15,000 in December to almost $30,0000 in April, bitcoin mining difficulty continues to spike, opening a debate about whether Proof-of-work will be sustainable for the future of digital assets.
Bitcoin’s mining difficulty changes every 2,016 blocks to keep the creation of new blocks on the network at a constant rate of 10 minutes. In recent weeks, the difficulty has been increasing steadily, with the last time it decreased happening on February 11th.
One explanation for the continuous difficulty spikes is that, with the surge in price, the interest in mining has grown over the past couple of months, attracting new miners — and with a more competitive playing field, leads to increased difficulty.
This high mining difficulty can lead to a lower hash price — the profit rate that miners obtain for the hashrate they provide to the Bitcoin network.
According to Glassnode, the 7-day smoothed moving average peaked above 350 EH/s before correcting to levels around 340 EH/s.
More miners are competing for rewards offered to those who produce new blocks in the network, leading to an increase in mining difficulty. However, the Bitcoin hashrate has recently fallen by an average of 20 EH/s this week, although metrics can vary according to different sources.
Bitcoin Resurgence in 2023 Is Also Benefitting Mining
Despite the challenges faced by Bitcoin miners in recent times, the cryptocurrency’s mining difficulty has continued to increase, reaching a new record high. This comes amidst a market rise that has seen Bitcoin appreciate by over 50% since the beginning of the year, attracting renewed interest from miners.
The higher mining difficulty can be attributed to more miners joining the network in search of the rewards offered to those who produce new blocks. However, the mining sector’s growth is currently threatened by stricter regulations in some regions like Texas, USA, which could hamper expansion in the near future.
Foundry USA currently dominates the field, holding a commanding 34.31% share of the total hashrate, followed by AntPool with 18.96%. These two companies account for over half of the network’s computing power.
While the increase in Bitcoin’s mining difficulty may lead to a lower hash price, miners’ profits have surged following the recovery in the cryptocurrency’s value. However, this profitability may be short-lived, as the difficulty has risen by 35.4% since the start of the year, putting pressure on the sector.
These developments highlight the ongoing interest and demand for Bitcoin, despite the uncertainties surrounding the mining sector’s future. As cryptocurrency continues to evolve, it remains to be seen how mining regulations will impact its growth and profitability in the long run.