Mining Bitcoin has Never Been This Difficult Before

Every time the bitcoin went through a halving event, it made it much more difficult for the miners to collect bitcoin for the same amount of effort. The recent halving event has led to a huge rise in the bar for what is required from miners to generate new bitcoins.  A lot of them actually saw themselves leaving the game altogether due to the halved reward for the same effort. However, the difficulty level for mining bitcoins reached an all-time high on Monday 12:00 UTC. The recorded value for difficulty stood at a whopping 17.35 trillion, a value that has never been seen before.

Mining Bitcoin has Never Been This Difficult

Recent times have been showing an increasing level of difficulty for bitcoin as the previous record came less than two weeks ago. On 1st July, bitcoin mining difficulty reached 15.78 trillion, as per the information coming on the blockchain explorer developed by Bitcoin.com providing live updates on BTC.

It has barely been two months since the last halving event happened for Bitcoin on 11th May. The current value of one block mined is 6.25 bitcoin, half of the previous value of 12.5 bitcoin. The last all-time high that occurred prior to this was in March before the halving and the latest difficulty level has managed to cross that as well.

The purpose of increasing the difficulty of mining bitcoin is to make sure that the ever-increasing strength of mining hardware does not affect the regulated flow of bitcoins into the market. This record difficulty figure is very much reflective of the fact that people are continuing to invest in hardware for mining. The halving of bitcoin per block has had no impact on the way people are investing in bitcoin mining. This is true, even after the fact that the value of bitcoin has been fluctuating between $9500 and $9100 ever since the start of July.

Mining bitcoin blocks requires something called “hashing” power and this is the amount of effort that a system puts into mining bitcoin. The network calculates the amount of hashing power constantly and every 2016 blocks, it adjusts the difficulty in mining to maintain its equilibrium. The mining process takes around two weeks for 2016 blocks and during that time, if the network sees an increase in the hashing power, it raises the difficulty level for the next period.

Dmitrii Ushakov said, “The increase in the network difficulty during the rainy season in Sichuan has happened every year for a few years now.” Dmitrii is the chief commercial officer of BitRiver which is central Asia’s largest hosting provider for mining.

 He said that the disruption in mining that was caused by the coronavirus in China is completely settled by now. Being the largest source of Bitcoin mining in the world with 65% of its total mining happening here, China saw a surge in recent days in the miners that were delivered there by the company. Dmitrii said, “This has resulted in a surge in the number of miners that were shipped and delivered in the past two months and these miners are now online.”

However, what makes it the largest mining country in the world is not just these new mining systems. There is an old player that is still holding its ground, even after being considered obsolete after the halving. The AntMiner S9, a system by Bitmain, was thought to be no longer profitable at the current reward rate against electricity bills. However, a recent update in the system allows users to reduce the voltage of the system, essentially running it in low power mode. This process is called underclocking, and with an already low per-unit cost of electricity at $0.03, it could still turn this old system into a profitable venture.

The process is said to increase the profit margin of the machine by 20% which seems like a high value. However, in absolute terms, this increment still means that the machine will only provide a negligible profit which is below $0.5 every 24 hours. This, considering that it is only possible at the low electricity rate of $0.03, would not be a very encouraging thing to see for most miners.

However, even with that in mind, there is still more than enough motivation for Chinese miners to utilize the older systems. The motivation is the huge excess of mining facilities that are present in the country. These facilities do not pay the standard $0.03 rate for electricity and instead, come up with a much lower rate for a bulk amount through agreements with hydroelectric plants. This can reduce the per-unit cost to even below $0.02, making it viable to continue using old machines.

However, the CEO of BTC.TOP, a China-based mining pool thinks that once the rainy season goes away, these machines will eventually retire, leading to a drop in the hash rate of Bitcoin.

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