Friday, September 22

Bitcoin mining is harder than ever

“Whoever wants celestial, let it cost him”, says an old and well-known saying. This phrase seems applicable more than ever to bitcoin mining, whose difficulty has reached an all-time high this Friday, January 21. With a record of over 26.6 T, this index surpassed the highest mark so far, which was 25 T, recorded in May 2021.

The data was provided by the tool Insights from Braiins, a company that provides hardware and software solutions for bitcoin miners. To highlight the data, the firm also appealed to a publication on Twitter.

“Bitcoin mining difficulty just increased and reached an all-time high
of 26.6 T”, highlighted Braiins on Twitter. Source: @brains_systems.

The new number, the result of an update that occurs every 2,016 blocks on the Bitcoin network, represents an increase of almost 9% with respect to the previous difficulty, which was already at high levels. With 24.3 T, the index reflected one of the highest points of a stage in which it had several consecutive increases, as reported by CriptoNoticias.


But nevertheless, the processing power of the network (hashrate) has not been affected too much for these increases in difficulty. If you look at the most recent data, you can see a drop to 190 EH/s which is the lowest value since January 15. Now, if a longer period of time is taken into account, the hashrate is still above the average of the last three months.

Generally, the hashrate drops with increasing mining difficulty, but this is not the case. Fountain: Braiins Insights.

However, this does not guarantee that the hashrate will remain unchanged in the future. In the hypothetical case that mining stops being profitable with so much difficulty and competition, and even with the drop in the price of bitcoin, there could be a disconnection of some miners that, yes, affects the processing of the network.

In addition to Braiins, other sources agree with these values ​​relative to the ATH (all-time-high) on the mining difficulty. In this sense, He anticipates that the next adjustment, which will be in approximately 13 days, will see a 0.54% drop in difficulty for miners.

Miners hold, despite the fall in the price of bitcoin

Beyond the change in the difficulty of mining, another interesting fact that the Braiins analytics shows has to do with the retention of bitcoin by miners. That is, what is commonly called holding.

As you can see in the graph below, the bitcoin outflow from miner addresses (light blue line) is currently well below the bitcoin inflows to these addresses (orange line). Something like this hadn’t happened since mid-December.

In the last month, a retention of bitcoin by miners is observed. Source: Brains Insights.

However, today the context is different, and this has mainly to do with the price drop of the cryptocurrency that has occurred in the last month. This decrease has been even more pronounced on January 21, when the price of the cryptocurrency fell even below USD 39,000.

Under these circumstances, it is not profitable for miners to go out and sell their bitcoin, since the profits would be limited compared to other moments of the cryptoactive price.

Thus, one possibility is that the smaller miners temporarily disconnect so as not to generate expenses that they cannot afford with the profitability obtained. This, of course, as long as the current conditions of low price and high difficulty are maintained.

On the other hand, another alternative in these circumstances is for the wealthiest miners to resort to loans with collateral in bitcoin to pay for their mining expenses. With this resource, miners can stay operational without having to “sacrifice” their bitcoin, waiting for the markets to turn green to finally realize their profits.