Bitcoin Mining Difficulty Hits Record High Amid Price Rally

Along with bitcoin breaking new all-time highs, its mining difficulty also hits a record high.

Saturday’s adjustment at block 665,280 marks the biggest increase in nearly 4 months, a 10.79% increase from the December 28 adjustment, putting the metric above 20 trillion for the first time ever.

Data from btc.com suggest that mining difficulty is set to increase another 10% in 11 days, which will push the metric to a new all-time high.

The difficulty that retargets every 2 weeks had seen serial increases in the past two months since last November, after dropping by more than 16% on November 3 – the biggest fall since 2018.

Bitcoin mining difficulty rate is a metric that shows how hard it is for miners to solve bitcoin blocks to receive the bitcoin reward. If miners stop mining en masse, the difficulty will decrease; when more miners contribute to the network’s hashrate, the difficulty increases.

Increasing mining difficulty implies that miners have been flocking to the network in large numbers. The last two months’ difficulty upturns, up a compounded 20%, indicate that the competition is heating up again

Since January 2 when bitcoin broke through the $30,000 level, it has been galloping forward like a runaway horse. As of press time, bitcoin is the world’s No.9 most valued asset, with a market value of US$667 billion, behind Apple (No. 1), Tesla (No. 6), Facebook (No. 7) and Tencent (No. 8) but ahead of Alibaba (No. 11) and Visa (No. 13), according to asset data aggregator AssetDash.

As the bitcoin rally extends, almost touching $42,000 Friday, miner revenue keeps pace, incentivizing even more participants to mine. While twelve months ago, bitcoin’s difficulty was below 15 trillion.

A veteran miner named Xiaohai told us that bitcoin mining revenue, as measured by income per TH/s, had more than tripled in nearly three months.

“Earnings per TH/s were around $0.07 to $0.08 in early October and spiked to $0.27 to $0.28 in the latest week.”

Accompanied with it is the recovery of mining machine market. According to mining machine sales in Huaqiang North, with the rising of bitcoin in price since November 2020, not only new mining machines are in short supply, but also used mining machines are in hot demand. On Jan. 9, the topic “Bitcoin Mining Machine Prices Double, But Demand Still Outstrips Supply” became a popular search.

At such a moment, it is reported that several mines in Sichuan have been cut off electricity supply due to the power shortage for the dry season. In addition, the State Grid has ordered hydropower stations to stop supplying power to “big data centers” starting from Dec. 8 to ease power shortages in Sichuan.

While the bitcoin mining industry is making new headway in North America. At the end of 2020, Marathon Patent Group, a North America-listed mining company, reached a contract with Bitmain for the purchase and sale of 70,000 units of S19 Antminer at the price of $170 million. The order is expected to be fully delivered by the end of 2021, according to people familiar with the matter.

According to Bloomberg’s Jan.1 report, the Nordic region, especially in Norway and Sweden, the weather is mild and helps to increase hydroelectric power generation. These regions will be new attractions for bitcoin miners for their cheap and abundant electricity.