Bitcoin Mining Difficulty As Profitability Drops For Mining Companies

Bitcoin is getting harder to mine. Mining difficulty for the world’s largest cryptocurrencies increased by 9.26% in the last two weeks, according to data from BTC.com.

Analysis from the website shows that the network’s mining difficulty is the highest it has been since January, reaching 30.97 trillion, with the hash rate hovering above 230 exahashes per second (EH/s) today.

Bitcoin mining is the process of using powerful computers to verify transactions on the blockchain. Mining companies, which are usually large operations that utilize server farms and use a lot of energy, are rewarded with newly minted Bitcoin.

Last month, miners in Texas suspended operations to help the power grid and conserve energy during a heat wave – a move that likely made Bitcoin easier to mine.

The turned on again weeks later, and now as the difficulty increases, miners may face slimmer profits as more computing power (and energy) is required, but the value of Bitcoin has remained stagnant.

At the time of writing, Bitcoin was trading at $20,205, according to CoinGecko data. It has struggled to break past the $25,000 mark for months – and is down more than 70% from the all-time high of $69,044 it hit in November.

Scott Norris, co-founder of private Bitcoin miner LSJ Ops, said Decrypt that “difficulty shrinking is cause for concern,” because it would mean more miners dropping the network — making it less efficient.

“A difficulty increase is an indicator of a strong and growing network, it’s actually a good thing,” he said, adding that “sectors like gas and water are championing cheap energy costs and allowing a new generation of long-term mining to emerge up.”

Zach Bradford, CEO of the mining company CleanSpark, told Decrypt that only the most advanced and efficient operators will be able to succeed in the market.

“Bitcoin’s recent, if short-lived, run-up combined with the easing of heat waves in some jurisdictions has contributed to more miners turning on and one of the biggest jumps in difficulty this year,” he said.

“Some miners have chosen to ride out the price depression with the expectation that Bitcoin’s price will increase in the coming weeks,” Bradford continued. “However, this jump in difficulty will make it harder for miners to earn bitcoin as there is more competition on the network.”

Given bitcoin’s price and current energy prices, he said, the jump may not be sustainable.

Bitcoin mining has been around for a long time criticised for the huge amount of energy it uses, but more miners are turning to renewable energy sources to keep the network secure.

CleanSpark, based in Henderson, Nevada, runs its Texas and Georgia mining operations on clean, renewable energy.

Editor’s note: this article has been updated to add comments from CleanSpark CEO Zach Bradford.