Bitcoin mining difficulty has definitely increased, with associated drops in hashrate and profitability, but the algorithm’s adjustment does not alarm miners.
According to reports, the difficulty to mine Bitcoin appears to have increased, hitting 7.3% this morning. This figure is updated every 2016 blocks (roughly every 2 weeks).
Yet this spike in difficulty does not seem to alarm miners, who are aware of the consequences of the enforced ban on crypto and mining issued in China last spring.
Indeed, when considering that China alone accounted for 54% of Bitcoin‘s total hashrate and had to go offline, it is reasonable to think that the miners’ comeback would not be a cakewalk. In all this, the Bitcoin network has not missed a beat.
In this regard, engineer Brandon Arvanaghi stated:
“There was no downtime whatsoever to the bitcoin network. That’s actually the smartest part of the bitcoin software: the difficulty adjustment”.
Not only that, the redistribution of the hashrate previously concentrated in China, seems to have redistributed profitability. Here’s how Jason Deane, an analyst at crypto consultancy Quantum Economics, describes it:
“Hashrate levels are still down 42.1% from the peak in May 2021 when the China exodus happened. That hashrate deficit means that those plugged into the bitcoin network right now are making bank”.
The likelihood that many miners who were in China have moved elsewhere could be described as an act of resilience against the new difficulty imposed on bitcoin mining.
Indeed, despite the declines in total profitability seen, compared to the pre-ban period, miners continue to cash in much more now than before.
This was only possible due to the self-correction of Bitcoin’s algorithm which, as early as July 2021, had seen a decrease in difficulty compared to previous periods.
In this sense, if the cost of energy and hashrate remain unchanged, the calculation to mine bitcoin should remain as simple as it was at the beginning.
In this regard, Mike Colyer, CEO of digital currency company Foundry said:
“We have seen the bottom of the hashrate decline, and it is nothing but up from here. This next adjustment reflects the fact that miners are building out capacity and plugging in new machines. There is an enormous amount of machines coming out of China that need to find new homes”.