Current estimates suggest that the next bitcoin mining difficulty rise could exceed 12%, making it the biggest in a single year. The global network hash rate increased by more than 11% since the launch of the latest generation bitcoin mining machines. The update is likely to have an effect on already falling profit margins.

The most significant increase in bitcoin mining difficulty since over a year could occur on Monday.

For instance, mining pool Braiins currently estimates it to be around 12.5%. Bitrawr, however, places it between 11.3% & 12.5%, and Luxor at 13.6%. BTC.com gives a conservative estimate of less than 9%. Although numbers are subject to change, they indicate an increase in difficulty.

According to data from The Block Research, bitcoin’s hashrate has increased by more than 11% in the last week. It currently stands at 250 exahashes per second (EH/s),

Kevin Zhang, Foundry’s senior vice president, said that there are many factors that contributed to the rise in difficulty. Foundry runs the largest bitcoin mining pools. It’s a combination of infrastructure being online, which means more capacity being built out and heatwaves dissipating. This is resulting in more uptime and less curtailment across the mining facilities. The latest generation of mining equipment is also being deployed.

According to Ethan Vera (COO of Luxor Technologies), a bitcoin infrastructure company that runs a mining pool, miners have been trying to scale up operations in North America for the past year following China’s ban. However, delays have occurred due to supply chain issues as well as power constraints.

He said, “As we move into Q4 2022, this is finally starting to roll out in scale, paving the path for machines to get connected and network hashrate to grow,”

Marathon CEO Fred Thiel said that many older models are being retired around the globe as it becomes less lucrative to mine with them.

Thiel stated that “now that those machines are being replaced by (Antminer] S19j Pros you have a 3 to 4X bump in hashrate on a per-machine basis for the same electricity.” The newer models will mine more bitcoin for the same amount of electricity as older models.

The difficulty of mining bitcoin jumped 9.26% by August when high heat weather subsided and the Antminer S19 XP was introduced to the market. The summer saw the difficulty drop significantly, with many bitcoin miners, especially in Texas, shutting down their machines due to high heat.

The difficulty of mining is referred to as mining difficulty. It adjusts approximately every two weeks or every 2,016 block in accordance with the network’s hash rate.

As the industry struggles to cope with falling bitcoin prices and rising energy costs, the upcoming update is likely to have an impact upon already falling profits.

Vera stated that this will make it more difficult for miners to raise capital and put pressure on operators at the bottom of the chain to close down.

Thiel says that miners who can keep up with the global growth in hash rates by using new-generation machines may not experience as much impact.

“We are growing our overall scale much faster than the global hashrate is growing,” Thiel said. Thiel stated that it would increase our profits. It will decrease the profits of miners that aren’t growing at a rate comparable to the global hash rate.

Marathon was responsible for a significant amount of the week’s hash rate growth. Between Sept. 30th and Oct. 5 , Marathon energized 19,000 miners, increasing its own hashrate by approximately 1.9 Eh/s. This is more than 10% of the overall network’s hashrate growth.

“We will deploy XPs in the coming months, which is 30% more efficient than the S19 pros. Thiel stated that global difficulty could increase by 30%, and there would be no net change.

Based on one example, Daniel Frumkin (director of research at mining company Braiins), who runs a bitcoin mining pool, a difficulty increase of about 12% could lead to a 20% decrease in profitability. The example shows that a S19j Pro with $0.05/kWh would make $4.65 per day, and fall to $3.75 if there is a 12% difficulty increase.


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Angie Byrd