2 - 3 minute read
Bitcoin miners are preparing for a significant increase in difficulty this weekend, with estimates indicating a potential jump of around 10%. Difficulty refers to the complexity of the mining process and adjusts roughly every two weeks based on the average block time. The last update saw a 3.6% decrease following a winter storm that led to a number of miners powering down. However, now that the storm has passed and more efficient machines have been deployed, the hashrate has come back online, leading to the expected increase in difficulty.
According to BTC.com, Bitrawr, Luxor, and Braiins, the increase could land around 10%. However, numbers could still change between now and Sunday, but estimates strongly indicate a sharp increase.
Daniel Frumkin, Director of Research at Braiins, attributes the increase to a combination of institutional miners scaling over a longer period and positive variance. Companies like Marathon and Hive Blockchain have been continually deploying efficient machines such as S19 XPs and Blockscale BuzzMiners, which were not yet in use during the last difficulty update following the winter storm.
Frumkin also notes that “there’s probably a good bit of positive luck by pools in aggregate that’s contributing to this large adjustment.”
According to recent operational updates, companies such as Hive and Marathon have installed new machines, with Cipher Mining increasing hashrate by 40% last month. Riot, which deployed 16,128 S19-series miners in December, said the storm knocked about 2.5 EH/s offline, but CEO Jason Les has reported that the hashrate has been coming back online.
However, while the past week has been more bullish for the industry, with bitcoin rallying above $20,000 and shares of public miners increasing, they are still facing tough economics. Anthony Power, an accountant and mining analyst who puts together a monthly roundup, notes that “we’re not seeing any change in the energy costs associated with mining… There’s not a great amount of profitability unless you’ve got the most efficient miner. If you haven’t got those you’re not probably not making sufficient money to cover your costs.”
The storm has passed, but bitcoin mining difficulty is about to blow through the roof with the expected 10% increase. The hashrate coming back online after the recent storm in the U.S., as well as deployments of newer, more efficient machines appear to justify the large increase. However, the industry still faces tough economics, with energy costs remaining high and profitability dependent on the efficiency of the machines being used.