Key facts:
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Bitcoin mining difficulty has decreased to March levels.
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The declining price of BTC has rendered many miners unprofitable due to their operating expenses.
The fall in the price of Bitcoin has prompted miners on this network to shut down equipment that is becoming increasingly unprofitable. As a result, both mining power (hashrate) and difficulty are also declining.
Bitcoin’s hashrate, which had been hovering above 600 exahashes per second (EH/s) in previous months, averaged around 560 EH/s throughout June. This loss of mining power impacted the most recent difficulty adjustment, which dropped from 83T to 79T. The network has not seen these levels since March of this year.
The mining difficulty adjustment is a protocol that runs automatically in Bitcoin, as established by its source code. Its function is to balance the production of blocks, which should be 1 every 10 minutes. Since the mining power in the network usually varies, every 2016 blocks mined (something that takes regarding 2 weeks) Bitcoin mining becomes easier or harder, as required by the network.
Reasons behind the fall of Bitcoin hashrate
There are a couple of reasons why miners are forced to turn off more and more machines in their farms. The first of these is the halving, an event that, like the difficulty adjustment, occurs automatically on the network.
The halving occurs approximately every 4 years, which is roughly the time it takes to mine 210,000 blocks in Bitcoin. Its function is to divide the amount of new bitcoins that are issued with each block. Initially, 50 BTC were mined per block, but following the fourth halving of the network, which happened on April 19 of this year, only 3,125 BTC are now created with each mined block.
Newly issued bitcoins are awarded to the miner who produced the corresponding block, so it works as an incentive. However, now that fewer BTC are issued per block, if the price does not rise, the profitability of mining is also halved.
This brings us to the other reason, which is the falling price of Bitcoin. While halvings usually create expectations of a rise in the price of BTC, this was the first time that the digital currency broke its previous all-time high before the halving occurred. However, Bitcoin struggled to stay above $70,000 and has been falling.
This Friday it reached USD 53,917, which implies a 27% correction from the USD 73,836 it reached in March, as we reported in CriptoNoticias.
The fact that the emission of bitcoins is being reduced, coupled with the fact that their market price is increasingly lower, strongly impacts the profitability of the miners of this network. This forces them to shut down mining equipment that is no longer profitable to optimize their operations as much as they can.
According to the mining pool F2Pool, as long as the price of BTC is below USD 58,000, a Bitcoin ASIC miner needs to offer an efficiency of at least 23W/TH to be profitable. They estimate this at an electrical cost of USD 0.08/kWh.
According to the website ASIC Miner Value, Bitmain’s Antminer S21 Hyd and S21 Pro are some of the few Bitcoin mining machines that maintain a positive profitability in the current scenario. Although they cost more than USD 4,000, the return on investment would take at least 4 years, if all other variables remain stable.
Regarding the fall in the price of bitcoin, Analyst Willy Woo considers that the capitulation of the miners is one of the main causes of the fall of BTC. Something that, as logical as it may end up being, does not take away the irony of this situation that makes miners part of the problem that affects them.
Key facts:
-
Bitcoin mining difficulty fell to March levels.
-
As the price of BTC drops, many miners become unprofitable due to operating costs.
The fall in the price of Bitcoin has been forcing miners on this network to turn off equipment that is becoming increasingly unprofitable. As a result, both mining power (hashrate) and difficulty are also declining.
Bitcoin’s hashrate, which had been hovering above 600 exahashes per second (EH/s) in previous months, averaged around 560 EH/s throughout June. This loss of mining power impacted the most recent difficulty adjustment, which dropped from 83T to 79T. The network has not seen these levels since March of this year.
The mining difficulty adjustment is a protocol that runs automatically in Bitcoin, as established by its source code. Its function is to balance the production of blocks, which should be 1 every 10 minutes. Since the mining power in the network usually varies, every 2016 blocks mined (something that takes regarding 2 weeks) Bitcoin mining becomes easier or harder, as required by the network.
Reasons behind the fall of Bitcoin hashrate
There are a couple of reasons why miners are forced to turn off more and more machines in their farms. The first of these is the halving, an event that, like the difficulty adjustment, occurs automatically on the network.
The halving occurs approximately every 4 years, which is roughly the time it takes to mine 210,000 blocks in Bitcoin. Its function is to divide the amount of new bitcoins that are issued with each block. Initially, 50 BTC were mined per block, but following the fourth halving of the network, which happened on April 19 of this year, Now only 3,125 BTC are created with each mined block.
Newly issued bitcoins are awarded to the miner who produced the corresponding block, so it works as an incentive. However, now that fewer BTC are issued per block, if the price does not rise, the profitability of mining is also halved.
This brings us to the other reason, which is the falling price of Bitcoin. While halvings usually create expectations of a rise in the price of BTC, this was the first time that the digital currency broke its previous all-time high before the halving occurred. However, Bitcoin struggled to stay above $70,000 and has been falling.
This Friday it reached USD 53,917, which implies a 27% correction from the USD 73,836 it reached in March, as we reported in CriptoNoticias.
The fact that the emission of bitcoins is being reduced, coupled with the fact that their market price is increasingly lower, strongly impacts the profitability of the miners of this network. This forces them to shut down mining equipment that is no longer profitable. to optimize their operations as much as they can.
According to the mining pool F2Pool, as long as the price of BTC is below USD 58,000, a Bitcoin ASIC miner needs to offer an efficiency of at least 23W/TH to be profitable. Something that they estimate at an electrical cost of USD 0.08/kWh.
According to the website ASIC Miner Value, Bitmain’s Antminer S21 Hyd and S21 Pro are some of the few Bitcoin mining machines that maintain a positive profitability in the current scenario. Although they cost more than USD 4,000, the return on investment would take at least 4 years, if all other variables remain stable.
Regarding the fall in the price of bitcoin, Analyst Willy Woo considers that the capitulation of the miners is one of the main causes of the fall of BTC. Something that, as logical as it may end up being, does not take away the irony of this situation that makes miners part of the problem that affects them.
