Last week was difficult for the bitcoin and it looks like it’s not going to get any better in the next few days. The hash rate and difficulty of bitcoin mining is expected to increase by 6.8%, which would take until all time.
High hash rate
Competition among miners has been at its peak since January 2022. And since August, bitcoin hash rate and mining difficulty have been increasing, currently at 6.8%. In question, the fact that many minors join the network after a phase of capitalization that lasted several months. This was automatically accompanied by an increase in operating costs.
As a reminder, the hash rate measures the computing power on a network like bitcoin. Difficulty, on the other hand, is a measure of the amount of work assigned to miners in a proof-of-work system. More concretely, they have to complete several tasks before they can add a block to a blockchain and therefore, earn bitcoins. Note that the difficulty is also responsible for maintaining a regular inflation rate.
Block time reduced from 9.1 to 10 minutes
A high hash rate, in fact, leads to greater difficulty. Likewise, a higher difficulty will generate a higher hash rate. By adjusting the difficulty in this way, it will be possible to maintain the average block creation time on the blockchain at about 10 minutes. According to analysts, the bitcoin mining difficulty is expected to reach 6.8% next week.
This peak therefore occurs after August when the difficulty reached 28.35 T at a block height of 749,952. This represents a 10% drop from the previous high of 31.25T seen in May 2022. The block time was 9.1 minutes which was reduced to 10 minutes after an increase in difficulty.
Withdrawal difficulty will reach 6.8%
The consulting firm Blocksbridge expects the difficulty to reach 6.8%, or the most significant increase since the beginning of the year. The metric should therefore surpass the previous record. Remember that the extraction difficulty is adjusted approximately every two weeks.
Also according to the consulting firm, miners with older equipment will struggle with the bearish transition. This, at a time when The price of bitcoin is trading around $20,000. Result: the block subsidy, which is the reward paid to miners for achieving a transaction block, will be affected. In order for their task to continue to be profitable, the miners must extract more blocks. The price of bitcoin is actually down more than 60% from the all-time highs in the fourth quarter of 2021.
Operating costs reaching 22%
According to data reviewed on August 22, 2022, the hash rate of bitcoin was more than 246 exahashes per second, which strengthened the security of the blockchain. Miners can also sell the bitcoins they have mined to cover mining costs.
Note that these increased by almost 22% in the second quarter, which puts additional downward pressure on the price. Other miners chose to sell equipment in an attempt to have funds to pay their debts. This is especially the case with Secure Digital Mining.
What about Ethereum miners?
If the hash rate of the bitcoin network is on the rise, it is not the only one. Ethereum also reached a new peak in August. This allowed miners to get better rewards, worth 4 times more than they normally get to add blocks to the network.
The next update to Ethereum that will move from proof of work to proof of stake will give miners a choice. They can return to bitcoin mining or move their equipment to the hard forks from Ethereum whose arrival is soon announced. In any case, miners with old equipment have a lot to worry about.
More information: Bitcoin fares significantly better than Ethereum on this key metric – But what do the charts say?