Difficult to mine Bitcoin makes the biggest jump in 29 months
Bitcoin has posted the largest difficulty increase in nearly 2.5 years.
At around 17:00 UTC on Tuesday, the network adjusted its difficulty level - a measure of the difficulty of miners to compete block rewards on the blockchain - to VND 15.78 trillion.
The increase of 14.95% is the biggest difficult jump since January 2018, seeing a bigger spike on the back of the 2017 crypto market price hike, data compiled by BTC.com shows.
As a result, mining companies that contribute hash power to the network are currently facing the fourth difficult two-week mining phase in Bitcoin history.
The latest increase comes after two consecutive drops in difficulty after the network's half-year event on May 11, 2020, reducing block rewards from 12.5 bitcoin per block to 6.25 bitcoin current.
The reduction of initial block rewards has forced some miners with inefficient and / or more expensive hardware to shut down their power supplies. That led to a drop in the total hashrate and difficulty until the beginning of this month.
The difficulty subsided on May 20 and June 4, and the competition abruptly dropped, meaning miners who could continue operating could get a bigger piece of the pie.
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However, the lower difficulty also means that some people have closed their old mining equipment as soon as a halving could once again be profitable in the past two weeks. Meanwhile, major mining manufacturers in China have been providing new, top-notch equipment since May.
These factors have pushed the 14-day average hash rate on Bitcoin from 98 million terahash per second (TH / s) earlier this month to about 113 EH / s.
Out of age?
All that said, the difficulty of mining Bitcoin Bitcoin has quickly returned to a halving that may bring some pain to current players.
Bitcoin adjusts its mining difficulty after every 2,016 blocks, approximately every 14 days, to ensure an average block time of 10 minutes. As more people choose to plug in during the two-week cycle, the network will see an increase in the hash rate which will shorten the blocking period and then increase the difficulty for the next cycle.
The current difficulty level is 15.78 trillion, following closely behind the highest three figures of 16.55, 16.1 and 15.95 trillion respectively - all recorded in the two months before halving. In other words, miners are facing almost as much competitiveness as they saw before halving, but the daily block grants are now reduced from 1,800 bitcoins to 900.
Therefore, every TH / s of computational power currently generates around 0.000008 bitcoins in 24 hours, worth around $ 0.08 at the current price of bitcoin.
Ethan Vera, co-founder and CFO of the mining group Luxor, said that with the hashrate value being reduced to 0.075 cents per TH / s, not many old, existing equipment will work again. The new hashrates coming on the market are likely to be driven by new generation machines and high efficiency.
Kevin Zhang, director of blockchain strategy at New York-based bitcoin mining power plant, Greenidge Generation, made a similar point of view, saying the company's strategy is to remain competitive. by buying and operating the latest generation equipment.
Despite the limited price action, we expect the hash rate to continue to rise in the coming time as more companies mining the older generation offline and the newer generation appear online, he said.
For comparison, the most recent mining devices, like Bitmain, AntMiner S19, can provide computational power that is almost 10 times that of an older model like the AntMiner S9, but only consumes twice as much power. times.
Read more: Bitmain's power struggle Begins to attract customers as the cofounder pauses shipments
Vera said an ongoing power struggle at Bitmain, the world's largest bitcoin mining manufacturer, would likely cause a delay in the supply of new mining equipment, Vera said. although he thinks the network hashrate could still reach 140 million TH / s by the end of the year.
This is almost in line with what the market is pricing for the FTX 4th Floor. 2020 The future is difficult, says Vera.
Crypto derivatives exchange FTX launched a pair of bitcoin futures trading quarterly last month. Currently, third and fourth quarter futures contracts are trading at around $ 18, reflecting expectations that the average hash rate and mining difficulty could increase by 20% in the second half of this year. .