Bitcoin (1) operates on a decentralized computer network or distributed ledger that records bitcoin transactions. When network computers validate and execute transactions, fresh bitcoins are generated or mined. These networked computers, or miners, conduct the transaction for a Bitcoin payment.
What's the current situation?
On Monday, the number of hashes required to mine one bitcoin reached an all-time high of 35.61 trillion as miners increased their production or new miners joined the network. The bitcoin protocol has an automatically updating feature called bitcoin difficulty that establishes how challenging mining a bitcoin block is. It ensures that transactions are handled at a consistent rate of 10 minutes.
How hard is it to mine now?
For every 2016 block, the difficulty is changed to reflect changes in the hash rate. The mining difficulty on the Bitcoin network has increased by 13%, according to the most recent estimates, to reach 35.61 trillion, the largest increase since the middle of 2021. ASICs are specialized hardware processors that miners use to compete in solving cryptographic challenges, but the higher block difficulty will make it more difficult for them to do so (ASICs).
Additionally, more than only the difficulty level has increased. According to statistics (2), the hash rate of the Bitcoin network has reached an all-time high of 257 exahashes per second (EH/s). The amount of computational power allotted to the blockchain for transaction verification and earning block rewards is known as the hash rate. An increase in mining difficulty accompanies hash rate growth.
What caused this scenario?
Analysts attribute the increase in difficulty rate to a wide range of reasons. According to Kevin Zhang, senior vice president at mining pool Foundry, it's a combination of infrastructure coming online, meaning more capacity is being built out, heatwaves dissipating, which is resulting in better uptime and less curtailment across mining facilities, and more efficient latest generation mining equipment being deployed.
The increased cost of mining blocks may harm the miner's profitability. Analysts predicted the difficulty bump would reduce the miners' profitability by approximately 20%; This occurs when the price of Bitcoin has been declining year to date, from $46,000 to over $19,300.