Bitcoin Mining becomes difficult, hits all time high of 17.3 Trillion

Mining bitcoin has never been harder and this is a downside for individual miners, should focus on alternative mechanisms like mining farms or mining pools.

By · Jul 15, 2020 . 6min read

Photo by Dmitry Demidko on Unsplash

According to Blockchain.com, record-high Bitcoin hash rate saw a latest adjustment of +9.89% making it difficult for miners in the Bitcoin Network. It hit the all time high above 17.3 trillion. New bitcoin are produced through mining. A very powerful computer solves complex mathematical problems to create a new block. This block is then performs various transactions. However, the problem arises when your computer is trying to decide which chain of blocks to join, as some are not trustworthy.

How and why the mining difficulty varies

Satoshi Nakamoto slowed down the process of creating new blocks to try and solve this issue. In essence, your computer attempts to solve a cryptographic puzzle, but the probability that it is successful is highly random. On average, a computer solves a puzzle every 10 minutes. All the computing nodes in the network throughout the world will now start working on a new puzzle.

Now, the difficulty level of solving these puzzles varies over time, specifically at the rate of every 2016 blocks created. Computers improve over time thus creating the need for the variation i.e., solving puzzles become easier.However, solving puzzles can also become harder if there are many nodes are working on it. Hence the higher mining difficulty impacts mining profitability.

What this means

Currently, mining difficulty is at an all-time high. In fact, since the 1st of July this year, there has been a 9.89% increase in difficulty. This is likely due to the vast number of individuals and groups who are currently mining. Individual miners are finding that it is impractical for them to mine, simply because of the electricity costs involved in doing so. Profitability will plummet.

14th July 201967.83E
14th August 201973.25E
14th September 201989.66E
14th October 201984.90E
14th November 2019101.39E
14th December 201998.63E
14th January 202093.78E
14th February 2020117.79E
14th March 2020110.87E
14th April 2020129.22E
14th May 202087.19E
14th June 2020108.38E
14th July 2020135.16E
Hash rate progression over the last 12 months

On the other hand, it encourages groups known as mining farms or mining pools to continue their work since they enjoy economies of scale and achieve greater probability.

In conclusion, the best option for individual miners is to go through the mining syndicate because of the increased expense in mining individually. Individual miners should pool resources in order to increase their computational power to earn substantial rewards.

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