As bitcoin enters a new bear market, the mining sector is feeling the pain. Specifically, miners are seeing their profit margins dwindle as Bitcoin’s price falls and Bitcoin’s mining difficulty continues to rise. Bitcoin mining revenue potential, defined as its hashprice, has fallen some 68% from its 2021 peak and 58% from 2021’s average. Two things affect Bitcoin’s hashprice: Bitcoin’s actual price and Bitcoin’s mining difficulty, which impacts the likelihood of solving a block and obtaining a reward of 6.25 BTC (approximately $187,500). For a bit of context, at bitcoin’s all time high in November 2021, a block reward would have yielded approximately $430,000. Bitcoin’s mining difficulty adjusts upward or downward roughly every two weeks, making it easier or harder to mine Bitcoin based on network competition. The difficulty increases if miners produce blocks too quickly in the preceding two weeks, and conversely, difficulty decreases if miners produce blocks too slowly. This ensures that miners propagate blocks as closely to the 10 minute average targeted by Bitcoin’s code.
Read more : Bitcoin Miners Face Shrinking Profitability Amid Crypto Crash.
