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Bitcoin mining difficulty rises 3.4% to all-time high as hashrate jumps

Bitcoin’s mining difficulty level rose 3.4% on Thursday to an all-time high, as the network’s hashrate also increased to a record high. The difficulty level changes roughly every two weeks and measures the additional computing power a miner has to use to verify transactions on a block. A higher difficulty reading indicates that it is more competitive to mine Bitcoin, reducing profit.

See related article: U.S. congressman says crypto mining tax scrapped in debt ceiling deal

Fast facts

  • The mining difficulty reading came in at 51.23 trillion at block height 792,288 in Thursday’s adjustment. That follows a 3.22% rise in the previous adjustment on May 18, according to data from BTC.com.

  • The difficulty of mining Bitcoin typically rises when more miners go online, which raises competition. Miners are rewarded Bitcoin for validating transactions on the network. The higher the difficulty, the less chance a miner has to secure an entire block on the chain. Therefore, a miner’s profitability is dependent on the difficulty level.

  • Mining difficulty adjustments are closely correlated to changes in hashrate, the level of computing power used for mining.

  • “In short, difficulty follows hashrate up or down, and hashrate is driven by the overall profitability of building and operating bitcoin data centers,” said Andrew Webber, chief of Digital Power Optimization that works with power producers to deploy Bitcoin mining operations. “If Bitcoin spot price goes higher, it means larger profits for miners.

  • Bitcoin’s hashrate was at around 375 exahashes per second on Wednesday. That was an increase from the 365.1 exahashes recorded during the last adjustment on May 18, data from Blockchain.com shows.

  • At that time Bitcoin was trading at around US$26,800, up roughly 61% for the year. Its price stood at US$27,068 at 10:10 a.m. in Hong Kong on Thursday. That was a rise of 3.6% for the past seven days, according to data from CoinMarketCap.

  • Meanwhile, most Bitcoin mining-related stocks in the U.S. gained this week. On Sunday, Republican congressman Warren Davidson indicated that a proposed tax on electricity use by cryptocurrency miners in the country had been scrapped. The decision is part of the ongoing U.S. debt ceiling negotiations between the White House and House Republicans.

  • “The potential for some arbitrary tax on this specific industry was an obvious overhand, which seems to have been pushed away for the time being,” Webber said.

  • Shares of cryptocurrency mining company Marathon Digital Holdings on Nasdaq have climbed 9.6% since closing on Friday — a rise of 187.9% for the year. Bitcoin miner Riot Platforms shares have also jumped 9.9% since Friday — a 256% rise since the beginning of this year.

  • (Updates from fourth paragraph with comment.)

See related article: Tether stablecoin issuer taps Uruguay for Bitcoin mining using renewable energy