Bitcoin Miners About to Be Hit With Record Difficulty as Profitability Drops
Work is about to become harder for Bitcoin (BTC) miners, as mining difficulty is set for another all-time high (ATH) in a matter of hours, which will be the second one in a row, once again cutting into the already decreasing profit margins of miners.
The Bitcoin mining difficulty is the measure of how hard it is to find a new block compared to the easiest it can ever be. It is recalculated every 2016 blocks to a value such that the previous 2016 blocks would have been generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every ten minutes. The 7-day moving average block time on May 9 was 9.63 minutes.
As more computers attempt to mine Bitcoin and compete for the rewards, the difficulty of finding new blocks increases. This ensures that miners still find blocks even as more miners join in and that overall mining times remain consistent even as the network hashrate grows.
This rise follows a nearly 5.6% increase seen two weeks ago when the difficulty reached the 29 T range for the first time in the network’s history.
Meanwhile, Bitcoin hashrate, or the computational power of the network, has remained almost unchanged. After briefly touching all-time highs above 263 exahashes per second (EH/s) a few weeks ago, the network hashrate has been hovering around the 260 EH/s range.
While the hashrate has remained relatively stable, the total number of Bitcoin miners has continued to increase. With more miners joining the network, the difficulty will continue to rise and reach new all-time highs in the coming weeks. As the difficulty rises, so does the mining breakeven point.
In the same time period, however, Bitcoin mining profitability saw a much larger drop, falling nearly 13%. Over the past 14 days, the price of BTC went down 23%. The price went from about USD 39,390 seen on April 27 to the current (15:39 UTC) USD 31,315.
The mining difficulty of Bitcoin is adjusted around every two weeks (or more precisely, every 2016 blocks) to maintain the normal 10-minute block time.
According to data provided by ByteTree, over the past weeks, miners have spent significantly more of their newly generated BTC than they held.
On May 1, the last time the difficulty was adjusted, it increased by 6.85% to 18.65 T. This was the 12th-largest increase in Bitcoin’s history. The next adjustment is scheduled for May 16 and is expected to result in another significant increase of around 6%.
The total value of all BTC mined so far is around USD 620 billion. This makes Bitcoin’s mining difficulty the highest it has ever been and close to 30 times higher than the Ethereum network’s.
As the price of BTC neared its all-time high of USD 61,000, miners were raking in huge profits. However, since then, the price has dropped and the mining difficulty has continued to increase. This has resulted in a decrease in profitability for miners.
According to data from Ycharts, the Bitcoin Miners Revenue Per Day is at a current level of 30.47M, down from 32.28M yesterday and down from 71.07M one year ago. This is a change of -5.62% from yesterday and -57.13% from one year ago.