Increasing the difficulty of mining
On August 18, 2022, bitcoin mining difficulty rose again after the 1.74% increase recorded two weeks ago on August 4. At a block height of 749,952 at 7:07 am EST, the network’s mining difficulty increased 0.63% from 28.17 trillion to 28.35 trillion on Thursday morning.
The bitcoin mining difficulty automatically adjusts every two weeks to keep the time required to mine a new block at around 10 minutes. The more computing power connected to the network, the more the difficulty will adjust, and the more computing power is removed from the network – as has happened recently – the more the difficulty will adjust.
One of the reasons for this increase is that almost all bitcoin miners present in China at the end of spring 2021 had to leave the country after the ban on cryptocurrency mining. Even if China is still the second bitcoin mining center in the world. Some went to Kazakhstan and a lot went to Texas. Texas offered very favorable regulations with a particularly pro-bitcoin elected official, a unique electricity grid and attractive energy prices – these are critical components for a bitcoin mining company.
The situation in Texas has become very complicated this summer. In fact, the individual energy network is prone to power outages. Hot temperatures in particular are forcing bitcoin miners to invest in more expensive cooling systems, on top of all this cryptocurrency miners are facing financial hardship due to falling bitcoin prices. Mining company Core Scientific to completely shut down its Texas data center operations several times in July to support the Texas state power grid operator.
The mining offer is expanding and countries are taking advantage of their strategic advantages
In a recent study by 911metallugirst, we found that the price to mine bitcoin varies greatly between countries. It is estimated that it takes 1,449 kilowatt hours (kWh) of energy to mine one bitcoin. That’s the same amount of energy the average US household consumes in about 13 years.
Venezuela is the most expensive country to mine bitcoin, at $246,530.74, while Kuwait is the cheapest country at $1,393.95 to mine one bitcoin, which means miners could earn $19,469.74 in profits.
This price difference pushes companies and investors to turn to something called “cloud mining”. Cloud mining is another way to invest in cryptocurrencies and earn consistent passive income without directly using mining equipment or hardware.
One of the leaders in this field is ECOS, the Armenia-based company supports traditional Bitcoin mining with its on-premises infrastructure, and offers various cloud mining contracts, ranging from 24 to 50 months. In addition to benefiting from inexpensive electricity, the optimal temperature in this region eliminates overheating problems at no extra cost – the average annual temperature in Hrazdan, Armenia is 4.8°C. Lya Goldberg, Associate Director at ECOS:
“We have come a long way from legalizing mining in Armenia to launching our own energy infrastructure, ready to scale. We want to offer simplicity to our partners in all areas: from launching your mining activity in our data center to daily monitoring of the results of the European Union. request not to leave your home”.
Bitcoin mining remains a very complex activity subject to climate, geopolitical and energy difficulties. Mining companies are turning to innovative solutions to sustain their activities and are looking for new hosting areas.