Bitcoin has just announced its biggest mining challenge increase in nearly two and a half years.
Sometime in Mid-June of this year, the network adjusted its difficulty level – a measure of however exhausting it is for miners to compete for block rewards on the blockchain – to 15.78 trillion.
The 14.95% rise is the biggest problem jump since January 2018, which saw a bigger spike on the rear of the 2017 crypto market Bull Run, information compiled by BTC.com shows.
As a result, miners contributing hashing power to the network are currently facing the fourth-most troublesome two-week mining period in Bitcoin’s history.
The latest increase comes when two consecutive declines in problem following the network’s quadrennial halving event on May 11, 2020, that reduced block rewards from 12.5 bitcoin per block to the present 6.25 bitcoin.
The reduction in block rewards at first forced some miners with inefficient hardware and/or additional expensive electricity resources to halt operations. That led to a decline in Bitcoin’s total hashrate and challenge until earlier this month.
The difficulty drops on May 20 and June 4, and also the abrupt reduction in competition, meant that those miners able to continue in operation may receive an even bigger slice of the pie.
However, the lower difficulty additionally meant that some who had to pack up older mining equipment instantly when the halving might yet again turn a profit within the past two weeks. Meanwhile, major Chinese manufacturers are delivering new, top-of-the-line mining equipment since May of this year.
These factors have pushed up the typical 14-day hash rate on Bitcoin from 98 million terahashes per second (TH/s) earlier this month to currently around 113 EH/s.
Dispose of Obsolete Machines?
All that said, the actual fact that Bitcoin’s mining issue has quickly bounced back to the pre-halving levels could bring pain for a few existing players.
Bitcoin adjusts its mining issue every 2,016 blocks, roughly every 14 days, to confirm an average block interval of 10 minutes. once additional folks opt to connect during a two-week cycle, the network will see a hash rate increase that may shorten the block interval and can afterward increase the problem for the subsequent cycle.
The current problem level of 15.78 trillion follows closely behind the highest three figures ever of 16.55, 16.1, and 15.95 trillion, respectively – all recorded within the 2 months previous the halving. In other words, miners face aggressiveness near to that seen before the halving, however, the daily block subsidies are currently down from 1,800 bitcoin to 900.
As a result, every TH/s of computing power is currently generating around 0.000008 bitcoin in 24 hours, worth around $0.08 at bitcoin’s current price.
“With the value of hashrate set to decrease to $0.075 cents per TH/s, not several of the present, old-gen equipment can turn back on,” aforesaid Ethan Vera, co-founder, and corporate executive of the Luxor mining pool. “New hashrate returning onto the market can possibly be driven by new-gen and high-efficiency machines.”
Kevin Zhang, director of blockchain methods at New York-based bitcoin mining-power plant hybrid Greenidge Generation, offered the same view, expressing the firm’s strategy is to remain competitive by procuring and running the latest-generation equipment.
“Despite restricted price action, we have a tendency to expect the hash rate to continue rising in the near term as additional older generation miners go offline and newer generation ones return on-line,” he said.
As a comparison, the foremost recent mining devices, like Bitmain’s AntMiner S19, will deliver computing power that’s nearly ten times that of an older model just like the AntMiner S9, however, solely consumes double of the power.
An on-going power struggle at Bitmain, the world’s largest bitcoin miner maker, can possibly cause delays to the delivery of the latest mining equipment, said Vera, although he thinks the network’s hashrate may still reach 140 million TH/s by the year’s end.
“This is roughly in line with what the market is rating in for FTX’s Q4 2020 issue Futures,” Vera aforesaid.
Crypto spinoff exchange FTX rolled out a bitcoin issue quarterly futures trading pair last month. Currently, the 2020 Q3 and Q4 futures are trading at around $18, reflecting an expectation that the typical hash rate and mining issue may increase by another 20% within the last half of the year.