25% Off Ends InConsensus 2024 Flash Sale
00DAYS
00HR
00MIN
00SEC

Features article to verify IDEAS promotion module appears [Layer2].

Bitcoin miners are stepping up production as the weather cools down, so the network automatically adjusted to increase the difficulty of mining a block.

AccessTimeIconAug 31, 2022 at 3:22 p.m. UTC
Updated Nov 23, 2022 at 1:28 p.m. UTC
Layer 2
Static Headline: Amazing Event
Static Subheadline: Oct 24, 2023 - City, StateStatic description: Where the industry establishes the digital economy’s legal, regulatory and compliance best practices for the future.Subscribe Today

The difficulty of mining a bitcoin block increased by 9.26% on Wednesday, making it this year's second-biggest increase, which is likely to result in narrower profit margins for the industry.

The metric adjusts automatically to keep the time required to mine a bitcoin block to roughly around 10 minutes, depending on the amount of computing power on the network. The higher the hashrate, the higher the difficulty, which lowers miners' profitability. Earlier this summer, miners across the U.S. and in Texas, a hub for the industry, were curtailing their operations to cope with heatwaves, which contributed to lower difficulty and network hashrate.

Today, the difficulty reached 30.97 trillion, as the hashrate hovered over 230 exahash per second (EH/s), according to data from CoinWarz. The difficulty level is just under its all-time high in May of 31.25 trillion, according to data from mining pool BTC.com.

As the difficulty increases, miners' profit margins get squeezed, since they are less likely to successfully mine a block and reap the rewards. Miners were already feeling the squeeze this year as the price of bitcoin fell more than 50% this year, power prices (a major cost for the miners) increased and raising capital has become very expensive. The increase in difficulty could add more to the miners' woes.

Shares of some of the largest publicly traded bitcoin miners, including Core Scientific (CORZ), Marathon Digital (MARA) and Riot Blockchain (RIOT) have already fallen more than 60% this year.

The hashprice, a metric coined by mining services firm Luxor Technologies that measures revenue per terahash of computing power, has dropped dramatically in the last month and particularly in the past few hours, following the difficulty adjustment. In the month of August, revenue in U.S. dollars per terahash dropped by about 24%, whereas on Wednesday, the hashprice fell by 8%.

dave-hoefler-m5oOq4iyaeQ-unsplash.jpg

More on Markets


TEST Crypto 2022

Policy Week_Menu Title

CoinDesk - Unknown

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about