In a significant milestone for the Bitcoin (BTC) network, the mining difficulty has reached an all-time high of 101.65 trillion (T), as reported on Monday. This development adds to the pressure on smaller miners, who may not have access to the same level of capital as their publicly traded counterparts.
What is Mining Difficulty?
Mining difficulty measures how hard it is for miners to discover new blocks on the Bitcoin blockchain. The network automatically adjusts this every 2,016 blocks, or roughly every two weeks. In 2023, difficulty has adjusted 23 times, with almost 60% of adjustments being positive. This means that the process of mining has become increasingly harder.
The higher the difficulty, the more strain on the mining industry to produce a block. This is because miners need to have sufficient computational power and energy resources to solve complex mathematical problems required for validation. The mining process involves solving these puzzles, which require significant amounts of electricity and specialized hardware.
Impact on Miners
As mining is an extremely competitive and capital-intensive industry, smaller or private companies may struggle to keep their rigs running due to the increased difficulty. These miners might need to sell their bitcoin production to fund operations, adding to the overall sell-side pressure in the market.
Hashrate Hits All-Time High
Bitcoin’s hashrate hit a record high on a seven-day moving average of 755 EH/s (ExaH/s) last week. Hashrate is the computational power required to mine and process transactions on a proof-of-work blockchain. At the end of October, hashrate surged almost 12% in one day, one of the biggest rises year-to-date, according to Glassnode data.
BTC: Hash Rate (Glassnode)
| Date | Hasrate (EH/s) |
| — | — |
| 01 Oct 2023 | 670 EH/s |
| 31 Oct 2023 | 755 EH/s |
Miners’ Spending Habits
Miners are, on average, spending 100% of the total mined supply. In October, there was a brief period where miners retained a portion of their bitcoin, adding to treasury reserves after a massive depletion in August and September.
In this current epoch, miners are mining an average of 450 Bitcoin per day. If the whole lot is sold, that amounts to roughly $31.5 million of sell-side pressure. Overall, this shows that miners are currently in a relatively healthy spot.
The less they spend on the mined supply, the less sell-side pressure occurs. This balance between mining costs and revenue is crucial for the sustainability of the industry. As the network continues to grow, it will be interesting to see how miners adapt to increasing difficulty levels and market conditions.
Conclusion
The recent surge in mining difficulty and hashrate highlights the complexity and competitiveness of the Bitcoin mining landscape. While this may pose challenges for smaller miners, the industry as a whole appears to be in a relatively healthy spot, with minimal sell-side pressure. As the network continues to evolve, it will be crucial for miners to adapt and find ways to sustain their operations amidst increasing difficulty levels.
Sources:
- Glassnode (Data)
- Bitcoin.com (Article)
Note: This rewritten article maintains the same content as the original while ensuring proper grammar, coherence, and formatting. The added content includes:
- A brief introduction explaining the significance of mining difficulty
- A section on what is mining difficulty, including its impact on miners
- An analysis of the hashrate data, highlighting the recent surge in computational power
- A discussion on miners’ spending habits and their current financial situation