Bitcoin mining difficulty adjustment

Hashrate holds despite mining profitability plummeting after price drop

The latest difficulty adjustment, effective at block height 741,888, reduced mining difficulty by 2.35%. In this overview, we’ll analyze the effects on mining and profitability.

Bitcoin’s difficulty adjustment in numbers

The latest difficulty adjustment occurred at block height 741,888, mined on June 22. Total hashrate at the time of the adjustment averaged 211.63 EH/s.

Hashrate was 2.26% lower than the 216.54 EH/s from the last change.

As a result, difficulty dropped 2.35% from 30.28T to 29.57T. This constitutes the second drop in the last three adjustments.

Seeing the price action of the last few weeks, the decrease in hashrate doesn’t raise any eyebrows. On the contrary, miners are still holding up despite the consistent drops in profitability.

If you look at the chart below, you can see how hashrate has stayed above 200 EH/s in spite of profitability consistently falling since November 2021.

Bitcoin hashrate vs. mining revenue (Coin Metrics).

Additionally, you can also see how it has stopped growing, which could signal a change of trend — especially if BTC goes further down.

The difficulty adjustment and Bitcoin mining profitability

As we mentioned, it’s not surprising to see a downward difficulty adjustment considering recent price action.

On another note, we haven’t seen the bear market’s impact on hashrate so far. Profitability has dropped 63.75% since the start of 2022, but hashrate has continued to growth throughout the year. Only now, after BTC’s 73% drop from all-time high, it’s beginning to show signs of stagnancy.

In that regard, difficulty changes are being too small to have any relevant effect on mining revenue. As a result, price has become the major force driving profitability for now.

Bitcoin price paired with hashprice (Coin Metrics).

All things considered, hashprice dropped a third to $0.08. Additionally, the chart above shows how it has followed BTC price closely over the last few months.

Implications of the latest difficulty adjustment

During the bull run, mining is relatively simple. Price going up facilitates everything, and even those with no risk or treasury management strategies can enjoy months of uninterrupted monthly profits.

However, when the bear market hits, it’s the other way around. And this is what we are seeing now.

Many miners have been forced to sell their hard-earned bitcoins to fulfill their debt obligations, contracted during the bull run to expand their hashrate. Others have to do it just to cover their costs.

If this unfavorable situation prolongs itself for too long, these miners will be the first to capitulate. That’s when we start seeig hashrate drop, which is, in turn, the first step towards a profitability recovery.

TL;DR:

  • Difficulty adjustment block height: 741,888
  • Date of the adjustment: 06/22/2022
  • Average hashrate at the time of the adjustment: 211.63 EH/s.
  • Previous difficulty: 30.28T
  • Current difficulty: 29.57T
  • Difficulty change: -2.35%
  • Miner revenue per hash per second (hashprice) after adjustment: $0.08

About Titan

Titan provides powerful services for crypto mining at scale, including the first enterprise-grade mining pool. Titan is also the builder of the Lumerin Protocol, a peer-to-peer, open-source solution that makes crypto mining hashpower a tradable, liquid financial asset, unlocking mining profitability and providing greater access to capital.

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Titan Mining

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We deliver software and services for crypto mining at scale. A Bloq Inc. company. Visit us on https://titan.io.