The difficulty of mining BTC has hit an all-time high, further reducing the already slim profit margins enjoyed by Bitcoin miners. The new trend may have a devastating impact on cryptocurrency miners. BTC miners may be in for a rough ride as the price continues its downward trend.
According to information provided by btc.com, a business that tracks the performance of Bitcoin mining, the difficulty of Bitcoin mining has significantly risen. The notorious crypto reporter Wu blockchain made the observation on Twitter that the cost of mining the currency has grown by about 5 % to 31.25T. This occurred after the network’s difficulty exceeded the 29T region for the very first time.
The Difficulty of Mining Bitcoin Continues to Increase
Bitcoin mining entails validating and adding new transaction blocks to the network. The degree of difficulty is used to quantify how tough it is to compete for mining payments.
Users of a network that participate in the mining process are miners or validators. They are paid with a predetermined amount of Bitcoins for every transaction block correctly verified and added to the BTC blockchain.
On the other hand, the hashrate of Bitcoin, which refers to the network’s total computational capability, has hardly moved at all.
Danger Ahead For Crypto Miners
Throughout this period, the value of Bitcoin saw a decline of 23 %. According to the data on Coingecko, the price dropped from about $39,392 on the 27th of April to about $29,310.
According to industry observers, Bitcoin mining businesses will be at severe risk if the value of the virtual currency remains below $30,000 for a lengthy period.
However, the length of time that the cryptocurrency will continue declining in value is the largest concern. The worry is not that the price of Bitcoin will drop below $30,000 but how long it would take to recover.
According to information that was made public by ByteTree, crypto miners have squandered a substantially larger proportion of their freshly minted BTC this period compared to previous months.
As the cost of BTC mining continues to climb, the bulk of miners is moving their operations to Ethereum since it offers a larger return on crypto investment. This comes at a time when the system is experiencing substantial difficulties as a result of the increased mining difficulty.
When Ethereum finally broke above the barrier level of $4,000 in 2021, mining Ethereum became even more lucrative. In addition, since the introduction of ETH 2.0 is getting closer, the most valuable cryptocurrency asset, BTC, is finding it more difficult to retain its dominating position in the market.