Bitcoin Mining Difficulty Reaches All Time High
The Bitcoin Mining Difficulty increased 3.6% to reach a new all time high earlier today following the hashrate all time high set earlier in the week.
This comes just a week after the hashrate took a 10% dip after the floods in China affected the Bitcoin Mining operations. Since then, the hashrate has bounced back quickly to 120 ETH/s.
But the Difficulty Adjustment making it harder to mine, it means miners now have to spend more on electricity, which is eating into their revenue.
What is The Difficulty Adjustment?
Bitcoin mining difficulty is designed to adjust every 2016 blocks, which is around every two weeks.
The adjustment is based on changes in the network’s hashrate, and is coded into the protocol.
The complex formula that the protocol asks miners to work out, so they can add the latest block to the blockchain and win the Block reward is adjusted with the difficulty.
The more miners that join the network, the higher the hashrate will get, so this usually has an increase in the difficulty, and the opposite will happen if miners move away from the Bitcoin network.
It is designed this way to ensure that the Bitcoin network continues to solve new blocks at a rate of one every 10 minutes.
Will The Miners Stick With Bitcoin?
Despite the drop in revenue, however, Bitcoin mining is still profitable with all new-gen ASICs mining rigs.
Due to the difficulty adjustment, however, many solo miners who are still using the older mining rigs are currently mining Bitcoin at a loss.
As such, it’s expected that miners might turn to other profitable cryptocurrencies that use the SHA256 mining algorithms while the difficulty remains high, or until the price of Bitcoin rises.
No doubt Bitcoin miners are mostly mining for profits, and if there is a gradual exodus to other altcoins, I would expect it to be temporary.
In Other Bitcoin Mining News
Kazakhstan Growing Into A Bitcoin Mining Hotspot
One of the world’s largest mining facilities, Energix, has announced its intention to open its business in Kazakhstan in September. The mining facility will open an impressive 180 megawatts (MW) data center early next month.
The mining facility has cost an estimated $23 million to construct, and will use cheap electricity from Kazakhstan.
It’s not just Energix that’s attracted to Kazakhstan either. Along with the abundance of cheap electricity, Kazakhstan’s geographical position makes it attractive to Chinese mining companies wanting to move old-gen mining gear out of China.
With its abundance of cheap electricity, it has propelled Kazakhstan up to fourth place in the global Bitcoin hashrate, behind China, USA, and Russia.
Iran Shuts Down Illegal Bitcoin Mining Farms
Whistleblowers in Iran helped power company Tavanir shut down 1100 Bitcoin mining farms, who are alleged to have been operating without the proper licenses.
It’s believed that individuals who provided information which lead to the detection of unauthorized miners received 100 million rials ($480), even mining isn’t illegal in Iran.
However, the seized mining farms were working without a licence, who Tavanir claim to have been using subsidized electricity.
Although Iran is one of the biggest contributors of the Bitcoin hashrate, mining without a licence is illegal and miners risk fines from $2,000-$5,000 for each piece of Bitcoin mining hardware used, and an additional fine of $20,000 for anyone caught using a subsidized electricity source.
Bitcoin Mining Industry Is Growing Rapidly
With the growing popularity of the Bitcoin mining industry, we’re regularly seeing new all time highs with the Bitcoin hashrate and the difficulty setting.
Miners might move away from Bitcoin while the difficulty is so high, but this will only be temporary, as the lure of Bitcoin is much greater than any other altcoin.
Countries with an abundance of cheap electricity are seeing mining as a way of turning their power into Bitcoin, and places like Iran have state sponsored mining farms.
China is still dominating the Bitcoin mining space and hashes about 65% of the Bitcoin hashrate, but with the instability there, companies aren’t as willing to spend big money in China as they are in other places.
It’s still very early days in the Bitcoin mining industry, and the competition to attract the business looks set to ramp up, and I expect a steady exodus away from China to places like Kazakhstan and Texas.
Author: Pablo Clarke
How long does it take to mine one bitcoin?
On average, the time it takes for miners to mine BTC is 10 minutes. But they don’t just mine 1 BTC. Mined Bitcoins are created with every new block and these produce the Bitcoin block reward which at the moment is 6.25 BTC, so you could say it takes less than 2 minutes to mine each Bitcoin.
How can I get free bitcoins?
Nothing is really free, because even when you earn free Bitcoins you’re giving up your time, which is precious. But you can earn free Bitcoins. If you are a gamer, there are games like Bitcoin Bounty Hunt which allows you to shoot your way to Bitcoin riches. Or you can save your Bitcoin in an interest bearing account and earn some BTC interest. Be careful with these, and only go with legitimate companies, though.
Why should I buy Bitcoin?
People who understand Bitcoin buy Bitcoin because it is a peer-to-peer money that nobody can manipulate. It’s all set in the Bitcoin codebase which is secured by hundreds of thousands of computers all around the world. Bitcoins can be sent by anybody and no third party is need to verify the transactions, and nobody can stop Bitcoins being sent. There are many more reasons why people buy Bitcoin, and a deeper dive before doing so is recommended.
How many bitcoins are left to mine?
There can only ever be 21 million bitcoins. At the time of writing, there are 18,422,856 bitcoins in circulation. There are 6.25 bitcoins minted roughly every 10 minutes, so that’s 900 every day. The amount of newly minted bitcoins is cut in half roughly every 4 years, in what is known as the halvening. The halvening will continue to take place until the last fraction of Bitcoin is minted in around the year 2140.
A Bitcoiner since 2017 and a Bitcoin Maximalist since 2018, Tommy is our main writer and editor at Bitcoin Maximalist. Other than researching and writing about Bitcoin, Tommy loves spending time with his family and supporting his beloved Leeds United.