Bitcoin mining has become exponentially more difficult.
The mining difficulty of Bitcoin has risen to a new record high, having increased by about 4.68% from Sunday’s level of 37.59 trillion to today’s level of 39.35 trillion.
The difficulty of mining Bitcoin is measured in terms of the amount of processing time needed to generate one Bitcoin. Approximately every two weeks, it is changed to make mining more difficult as more miners join the network and less difficult as they depart.
Despite brief dips, like the one in December 2022, mining difficulty has been continuously increasing over the past year.
Using statistics from CoinWarz, we can see that the mining difficulty has increased from its previous value of 26.24 EH/s on January 30, 2022, to its current value of 39.35 EH/s, a growth of almost 50%.
The current hash rate for Bitcoin, which is a measure of the processing power working to mine the cryptocurrency, is 305.81 ExaHashes per second (EH/s). This is still lower than the record high of 348.7 EH/S, which was recorded on January 6.
At the present hash rate, Bitcoin miners are attempting to solve the computational equations required to create the proof-of-work (PoW) cryptocurrency more than 305 quintillion times every second.
Bitcoin’s hash rate has increased by nearly 67% since this time last year when it was about 182.37 EH/s.
Despite the exponential growth of Bitcoin’s mining difficulty and hash rate throughout 2022, the price of the final output has not kept pace.
According to statistics provided by CoinGecko, the current value of a single Bitcoin is $23,211, down from a high of $38,232 on January 30, 2022, a decrease of over 39.3 percent.
The news isn’t all positive for those working in the Bitcoin mining sector, as an increase in mining difficulty might necessitate the use of more complex equipment, more computers, and more energy to mine the same amount of Bitcoin as before.
And if the Bitcoin price isn’t increasing at the same rate as the mining difficulty, the mining operation might become unprofitable.
In recent months, stories about insolvency and debt restructuring have been on the news virtually every week.
Among the top U.S. mining corporations, Core Scientific filed for bankruptcy in December 2022.
Greenidge Generation, another large mining company, has publicly said that they have “serious concerns” about their own company’s future.
Increasing miner difficulty and low Bitcoin prices aren’t the only things putting pressure on these businesses. Since 2021, the cost of industrial energy has increased by 16%, causing problems for mining companies that operate large numbers of energy-intensive devices.
