Bitcoin Mining Difficulty Hits Record High, Hash Rate Continues to Rise

In the volatile world of cryptocurrency, Bitcoin experienced a 2.1% decline, dropping to $26,850 from the previous day’s value. The fall below the 50-day moving average line has exposed the weight of the upper price, indicating a weak trend with a potential retreat near the Sanson neckline.

Simultaneously, Bitcoin’s mining difficulty surged by 3.22% compared to the previous period, establishing a new record high. The mining difficulty, which is adjusted approximately every two weeks, plays a crucial role in controlling the supply of Bitcoin and maintaining network stability and security. This adjustment process depends on the hash rate, the computing power on the network, and automatically regulates the time required to mine one block, which is typically around 10 minutes.

Source: Blockchain.com

As the hash rate continues to grow, miners have been engaged in fierce competition, even amid the sluggish Bitcoin price. The average hash rate, which represents the mining speed, has risen significantly. It currently sits above 350 EH/s, an 86% increase from 190 EH/s in January and 40% higher than the average hash rate of 250 EH/s seen seven months ago. Miners’ momentum appears unyielding, driven by improved machine performance and the rising transaction fees associated with the BRC-20 token reaction.

Source: Blockchain.com

As AZCoin News recently reported, Bitcoin Miner Reserves witnessed a significant drop of more than 2,000 BTC over the last 24 hours, indicating that miners have sold approximately $54 million worth of BTC.

Additionally, miners are benefiting from the decreasing prices of mining rigs, the specialized equipment used for complex calculations. As the global supply shortage of semiconductor chips, caused by the COVID-19 crisis, is resolved, the price of high-performance GPUs installed in personal computers has dropped. This reduction in operating costs allows mining companies to upgrade their equipment and improve their profitability.

However, the mining industry now faces potential challenges from the proposed tax policies of the United States government. President Biden has suggested increasing the tax on miners operating within the country, imposing a 30% tax on the electricity costs associated with mining.

Fred Thiel, CEO of Marathon Digital, one of the major US mining companies, expressed concern over this proposal, stating that such a policy could drive businesses away without necessarily generating increased tax revenue or promoting the use of renewable energy.

Looking ahead, around May 2024, Bitcoin is expected to experience its “halving,” where mining rewards for miners will be cut in half. This event could potentially increase selling pressure on the market supply of Bitcoin.

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