Originally published on: August 02, 2024
The difficulty of generating a new block on the Bitcoin blockchain recently experienced a significant increase of over 10.5%, breaking a three-month downtrend. This surge has implications for the operational costs associated with Bitcoin mining, impacting miners worldwide.
During the downtrend period from May 9 to July 30, Bitcoin’s network witnessed a decrease in difficulty, making it easier to process transactions on the blockchain. However, the recent spike in network difficulty not only demands higher computational power but also strengthens the network’s security against potential threats.
Following infrastructure upgrades and a decrease in hashrate, some Bitcoin miners, such as Bitfarms, reported higher earnings in July compared to previous months. Yet, the sharp increase in network difficulty on July 31 led to a new all-time high on Aug. 1, reaching 90.66 trillion. This 14% increase is expected to impact miners’ profitability in the near future.
Despite the challenges, the Bitcoin network has maintained a consistent hashrate of 630 exahashes per second for almost half a year. This stability serves as a crucial security measure based on mined blocks and network difficulty.
In response to financial pressures, mining firms are opting to retain their BTC rewards, anticipating a future increase in profitability. Marathon, for instance, holds over 18,536 Bitcoin valued at more than $1 billion, demonstrating a 48% increase in holdings since 2023.
As the mining landscape evolves, miners must navigate these challenges to optimize their operations and profitability. Stay informed on the latest developments in the crypto space to make informed decisions about your investments.