Bitcoin miners prepare for upcoming difficulty increase in the face of market uncertainty
Bitcoin (BTC) miners are bracing for another difficulty adjustment this week, as the computational power required to mine new coins reaches an all-time high.
The next difficulty adjustment, which is expected to happen on Friday 10 March, will take the difficulty from 43.05T to 44.46T, according to estimates from cryptomining data provider CoinWarz.
The expected increase will take the difficulty of mining new Bitcoin to another record high. This despite the fact that it is already at a record high level after a steady increase in difficulty since the second half of 2022.
Hashrate continues to rise
Increases in the difficulty of Bitcoin mining generally follow increases in the hash rate of the network – the amount of computing power dedicated to mining Bitcoin globally. As the hashrate rises, so does the difficulty of ensuring that the blockchain maintains an average time of 10 minutes between each block being mined.
Since June 2021, the Bitcoin network’s hashrate has risen steadily. It first crossed 300 EH/si at the end of January this year, and then reached another all-time high of close to 400 EH/si at the end of February.
As recently as March 2, the hashrate once again came close to its all-time high, reaching 385 EH/s, data from CoinWarz showed.
A rising hashrate is seen as a sign of network adoption and increases the Bitcoin network’s security and resilience against various forms of attack. For this reason, Bitcoin is considered by far the most secure cryptocurrency on the market.
Miners who struggle
As a direct result of the increase in difficulty, miners will necessarily see their margins squeezed even more. Unsurprisingly, this could be difficult for many of the biggest mining companies after a bear market that has now lasted more than a year.
Earlier this month, major publicly traded Bitcoin miner Riot Blockchain reported earnings that revealed the firm lost more than half a billion dollars on its mining operations in 2022. The loss was much larger than the $15.4 million loss the firm reported for 2021, despite the fact that it produced far more BTC in 2022.
It remains to be seen how Riot and other major mining firms will deal with the continued increase in Bitcoin mining difficulty this year and rising energy costs.
