Mining difficulty is a measure of the total amount of computer power required to generate one Bitcoin . According to website btc.com , Bitcoin mining difficulty has increased by 10% in the last 2 weeks. This number shows that many people turned their miners back on to make a profit when Bitcoin suddenly surged in price.
According to Bloomberg, by the end of 2022, Bitcoin price ‘s slide, rising electricity costs, rising interest rates, and the global economic recession are the big reasons why many miners are forced to withdraw their electricity, while mining workshops Large-scale mining companies that are on the verge of bankruptcy because of debt, such as Core Scientific , Argo Blockchain, Iris Energy, and Greenidge Generation.
Higher difficulty means more computing power is needed to mine the same Bitcoin block. Looking back at Bitcoin history, every time the difficulty increases, the price of this cryptocurrency will also go up. In contrast, the price of Bitcoin plummeted causing many miners to withdraw because there was no profit, causing the difficulty to decrease as a result.
largest The world cryptocurrency is around the $20,000 mark. Bloomberg quoted Matthew Schultz – president of cryptocurrency mining company CleanSpark : “With the improvement of Bitcoin prices and energy costs, miners no longer have to withdraw electricity, causing hashrate (hash rate). ) Bitcoin is at an all-time high.
An increase in difficulty can be seen as a good sign, but amid the gloom of the global economy, miners have to consider many things. When more people return to the cryptocurrency mining race, it means that the competitive pressure will be higher, the supply of Bitcoin is limited, so miners will get lower profits in the long term if the Bitcoin price remains at the current level. in.
Ethan Vera – COO of Luxor Technologies warned: “Increased difficulty offsets the increase in Bitcoin price, there will not be much benefit for miners in today’s harsh environment.”
Even so, the Bitcoin price rally has had a positive impact on the entire market, sending the shares of many miners up significantly. For instance, Bitcoin miner Bitfarms is up 140% this month, Marathon Digital Holdings is also up more than 130%.