New peak in mining difficulty for Bitcoin

bitcoin mining

Despite the bearish market and an almost 70% drop in the value of Bitcoin, the crypto giant’s mining difficulty rate has scaled a new high. The current all-time high is now 35.61 trillion hashes. The jump can be attributed to crypto miners ramping up their operations and joining the network.

The difficulty meter recorded a 13% spike. This has been the biggest upward jump on the Bitcoin network since May 2021.

A rise in mining difficulty is a positive development for any Proof-of-Work blockchain like Bitcoin. The network security and operations of such blockchains depend on the efforts/work put in by miners, so the rise, which suggests an increase in the amount of effort, is good news. The Bitcoin mining difficulty is automatically adjusted to the hash rate changes every 2,016 blocks.

Speaking to The Block, Kevin Zhang, senior vice president of the mining pool Foundry, said that the increase in mining difficulty rate can be due to various things. The deployment of new mining infrastructure and equipment and the coming online of existing mining facilities due to dissipating heatwaves could be factors.

The news comes at a time when Bitcoin mining company TeraWulf, for instance, is ramping up mining operations. TeraWulf has raised $17 million in debt and equity for this. (The equity share amounts to $9.5 million.) The amount will be used to complete the new mining site and improve the mining company’s operations in Pennsylvania and New York. The latter is in the final stages of construction and is expected to go live by the end of this quarter.

Last month, the company even expanded its total operational capacity to 1.6 EH/s.

Meanwhile, the increase in the mining difficulty rate is going to further lower revenue for miners who are still using old machines or are dependent on expensive power sources.

The rising mining difficulty rate is interesting because, since late 2021, Bitcoin mining revenue has been steadily falling. After peaking in October 2021, the crypto titan’s mining revenue dropped by 81%. And its gross margin has dropped by 30 to 40%—a significant fall from the 80 to 90% area it was in before.

These changes have had much to do with the huge drop in Bitcoin’s value and its thinning profit margin.

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