Why Bitcoin Mining Difficulty Is on the Rise Again
Despite the fact that the value of bitcoin (BTC) is still less than half of its peak value in 2021, miners are resuming operations or even expanding them due to falling electricity costs. In fact, Wednesday saw the mining difficulty reach a record high.
Increase Bitcoin mining difficulty due to 3 factors
The mining difficulty is an indicator of the amount of computing power necessary to earn bitcoin, and a high value is typically indicative of a healthy network. Three factors have contributed to the increasing mining difficulty:
- Falling electricity costs: Where electricity costs were skyrocketing a year ago, they have now fallen again.
- Efficient computers entering the market: The increase is partly due to increasingly efficient computers entering the market.
- More attractive bitcoin prices: The bitcoin price is a lot more attractive than six months ago.
Mining difficulty passes 50 trillion
The mining difficulty fell sharply during the peak of the market in 2021, according to data from BTC.com. However, in the following two years, we saw a fairly constant growth until the last few months, during which it increased even more. The value rose by 3.4% in recent weeks, following an earlier increase of 3.22%. Apart from two slight drops, the difficulty level continues to rise, indicating strong and healthy growth in the mining sector. At the time of writing, the mining difficulty stands at 51.23 trillion, marking the first time in the network’s history that a value of 50 trillion has been exceeded.
Six months ago, several leading mining companies had to close or sell large parts of their contents. One of those companies was Core Scientific Inc, which was forced to sell more than 27,000 miners as collateral for a loan. However, bitcoin mining companies are now using new equipment and improved cooling systems to optimize their operations in anticipation of the halving in April 2024. This coding change will halve Bitcoin rewards, which are currently their main source of income.