Oct 24, 2022
Bitcoin Mining Difficulty Adjustment
Bitcoin miners don’t stop as hashrate and mining difficulty set back-to-back all-time highs
Analyzing Bitcoin’s difficulty adjustment and mining profitability
The latest difficulty adjustment, effective at block height 760,032, increased mining difficulty by 3.44%. In this overview, we’ll analyze the effects on mining and profitability.
Bitcoin’s total hashrate
Although not as spectacularly as in the previous adjustment, hashrate’s growth was still substantial, adding 8.83 EH/s since the last epoch — the equivalent of 80,273 S19 Pro.
With this increase, hashrate at the time of the adjustment averaged 263.63 EH/s and market a new all-time high for the Bitcoin network.
Bitcoin’s mining difficulty
As it happens when hashrate grows, difficulty followed. The latest Bitcoin mining adjustment raised difficulty by 3.44%, reaching 36.84T for the first time ever.
We can now say that the Bitcoin network has never been more secure than it is today — something that’s increasingly becoming a habit after each adjustment.
The latest change constitutes the second consecutive increase and the last one in October, which has seen an overal 17.47% monthly gain in difficulty.
This makes it the largest monthly increase since August 2021, when hashrate started recovering after China’s crackdown. Back then, Bitcoin’s hashrate increased 21.55% within the month.
Hashprice, or mining revenue per TH/s
While the increasing difficulty doesn’t help, miners will be releaved to know that profitability remained stable, even after the adjustment.
The reason? A swift jump in Bitcoin’s price, which climed up to $19.6K virtually at the same time of the difficulty adjustment. This short swing mitigated the effect of difficulty change in profitability.
As a result, mining revenue per TH/s remained around $0.07. Despite profitbaility holding after the adjustment, mining profitability is still sitting barely above all-time lows.
Additionally, the other side of the coin is that with higher difficulty, profitability will become more and more dependent on price action. And just as this last swing up benefited miners, a swing down could hurt them greatly.
Bitcoin mining profitability overview
Historically, we’ve seen hashrate follow price. The more Bitcoin surges, the more incentive for miners to fire up their ASIC miners and start hashing.
Vice versa, when price falls, miners with low profit margins tend to halt their operations to avoid losses.
What we’re experiencing today is the opposite scenario. Despite the unfavorable conditions, hashrate is seeing unprecedented growth. This has driven many miners to critical situations, including:
- Having to liquidate their treasury to cover costs and debts.
- Turning to mergers and acquisitions to remain in business.
- Failing to fulfill contractual obligations with service providers, such as hosting facilities.
- Defaulting on their debt and even declaring bankruptcy.
Looking forward, as electricity costs and hashrate keep increasing, miners will have to implement new strategies to remain profitable and sustainable.
The difficulty adjustment in numbers
- Difficulty adjustment block height: 760,032
- Date of the adjustment: 10/24/2022
- Average hashrate at the time of the adjustment: 263.63 EH/s
- Previous difficulty: 35.61T
- Current difficulty: 36.84T
- Difficulty change: +3.44%
- Miner revenue per TH/s (hashprice) after adjustment: $0.069
