Bitcoin mining difficulty – new historic high set, what you need to know about it

3 týždne ago 0 42

For 2023, there have been 25 adjustments in Bitcoin (BTC) cryptocurrency mining, 19 of which resulted in an increase in difficulty. The most recent upward deviation amounted to 5%. The network reached a new record high on November 27. This value is equal to 67.96 T.

The mining difficulty is calculated in the number of iterations that must be performed to obtain a hash of a bitcoin block. The higher the number, the harder the block will be to solve. Consequently, the higher the difficulty, the lower the profitability of mining. This means that miners will see a decrease in BTC rewards over the next 12 days.

Bitcoin mining difficulty has hit an all-time high: what it affects

The immediate cause of an increase in BTC mining difficulty will always be an increase in hash rate. A hash is a cryptographic function that accepts input data of any length and produces information of a fixed duration.

During the previous adjustment, on November 12, the figure was 64.68 T, which is also an all-time high. The change, produced by the Bitcoin blockchain automatically through 2016 mined blocks, occurs on average every 14 days. This is done in order to maintain the rate of getting one block every 10 minutes and to ensure the stability of the network depending on hashrate fluctuations.

The increase in the number of units of processing power in a network like Bitcoin is due to miners adding additional machines or increasing their capacity. The main reason for this is the rise in the price of bitcoin, which began in January. Thus, for 2023 the complexity of BTC mining has risen by 92.2%.

After a year of cryptozyme, the profitability of mining has increased. Estimates this month show that digital coin miners’ profits rose to their highest level since July 3, 2023. The metric that investors use to measure the value of their computing power is $75 per day. Thus, many miners can get an incentive to increase their productivity without fear of losing money on the cost of electricity.

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As for the consequences of increasing the complexity of bitcoin mining, the most important one is the possible decrease in profitability. When mining becomes more difficult, the profit of participants decreases, which can also lead to a drop in hash rate.

As a result, miners with old equipment will be forced to stop their operations or look for third-party services that will provide them with capacity, such as Bitcoin Minetrix. This platform will allow decentralized and lower-cost bitcoin mining from the cloud. However, if the price of BTC rises or at least holds at the current level, investors may not be affected as much and continue to operate at the same pace.

Alternatives to traditional mining

As a result of the growth of the crypto segment, new options for obtaining digital currencies have emerged. Cloud mining is one of these ways. This solution is an alternative to traditional digital token mining. In addition, cloud mining is often seen as a more profitable cryptocurrency generation technology for users who lack technical knowledge and large initial capital.

Those who do not want to run and maintain their own equipment can rent computing resources from a cloud mining service provider. To become a user of a farm that mines bitcoin or other digital coins, you will have to buy a certain amount of hash power from the provider.

Given that the mining is done in the cloud, the investor doesn’t have to worry about noise, temperature, energy costs and resource management. This is the main advantage of mining digital coins in this way.

The global cryptocurrency mining market size reached $1.92 billion in 2022 and is expected to reach around $7 billion in 2032. Moreover, it is expected to grow at a CAGR of 12.90% from 2023 to 2032.

Cloud mining models come in two categories:

Hosted – the investor buys or leases equipment for cryptocurrency mining, but it is stored in a dedicated data center. The advantage of this option is to reduce costs by using the necessary electricity. In addition, the owner has full control over the money earned, since he has to pay not only for cloud mining services, but also for technical support, customization.
Powerrental – the miner makes contractual payments to access the hash power of the farm. At the same time, there is no need to pay for operation and installation costs. To receive a percentage of the pool’s profits, all you need to do is sign up for a pricing plan. When the farm discovers a new block and earns cryptocurrency as a reward, the money is distributed to users according to their share of the power.

However, some Web3 projects went even further and offered a new way to mine bitcoin in the cloud – through steaking. In particular, the pioneer of this solution is Bitcoin Minetrix (BTCMTX). The platform based on the concept of Stake-to-Mine (“mining via staking”) is funded by pre-selling its own token – BTCMTX.

Placing the coin provides a stream of passive income and mining credits for its holders. This new asset is ERC-20 tokens, which when burned provide the user with bitcoin mining time in the cloud.

Despite the fact that the development of the service is still ongoing, it is possible to start receiving payments thanks to steaking right now, with the yield expressed in altcoins BTCMTX. This system will be the most attractive for investors who will participate in the presale in the near future, as the rate decreases as the pool size increases.

The asset can be purchased for $0.0119. By the end of the presale, the token will rise in price to $0.0148. Bitcoin Minetrix attracted $4.7 million from early investors. The advantages of the project include the following:

Accessibility. Anyone with $10 can participate in bitcoin mining.
Various rewards. BTC coins and BTCMTX tokens that can be earned at an annual percentage yield (APY) of 130%.
Control over the assets received. Miners manage their own rewards. Users can withdraw coins and sell them on the exchange.

Conclusion

The complexity of mining is an important part of the security model of the Bitcoin network. Cryptocurrencies stipulate that solving a problem requires significant computing power, but does not become impossible. This balance is important because it assumes that the blockchain remains secure while gaining control of it becomes prohibitively expensive for any individual user.

Complexity also ensures that new BTC is released into the network at a predictable rate. Overall, the increase in the computational cost of bitcoin mining is a positive sign: it shows that more miners are joining the network, making it more secure.

However, it also affects the size of the rewards. For such a reason, it is expected that many investors will choose to switch to a greener and more affordable method than existing solutions – mining via steaking from Bitcoin Minetrix.

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Author: Saifedean Ammous, an expert in cryptocurrency economics.