March 28, 2024

Bitcoin Mining Difficulty Reaches All-Time High

The ban on mining in China in May last year caused a real stir in the ASIC market, as the decline innetwork power leads to a drop in complexitycomputing and increasing profitability. This was taken advantage of by Western companies that concluded the largest orders for the supply of equipment. For example, Marathon Digital took out a $100 million loan in October 2021 to order a batch of the latest S19 XP with a capacity of 140 Th / s and plans to become the most powerful public miner in the world in a year.

Increasing computing power has ledfirst to a record growth in the network hashrate, and then to the complexity of the calculation. These two metrics are inextricably linked as the system strives to maintain a block creation rate of once every 10 minutes. On January 21, Bitcoin mining difficulty jumped by 9.3%.
Bitcoin Mining Difficulty Reaches All-Time High

Image Source:btc.com

Despite the increase in complexity, profitability perhashrate is twice the historical minimum. This is due to both the relatively high cost of Bitcoin and the improvement of equipment. For example, the above-mentioned S19 XP asic provides an estimated income of $18.5 at an electricity cost of $0.1 per 1 kWh.
Bitcoin Mining Difficulty Reaches All-Time High

Image Source:bitinfocharts.com

The current cost of Bitcoin mining is estimatedat $34K, so a coin correction to $38K is not a big deal for miners with the latest hardware. However, it forces an increasing number of market participants to switch to accumulation in anticipation of rising prices.

 Bitcoin Mining Difficulty Reaches All-Time High

Image Source: Cryptocurrency ExchangeStormGain

Reducing the supply due to the accumulation of coins,usually drives up the price. However, the cryptocurrency market (like any other financial market) can experience a state of euphoria or panic. A potential ban on cryptocurrency transactions and mining in Russia, which is the world's third largest player in the Bitcoin hash rate, could trigger a sale of coins. In this case, we will see a repetition of the “Chinese scenario” of last year with a drop in network power and the continuation of Bitcoin correction.

 

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)