Record-Breaking BTC Mining Difficulty Coincides with Surge in BTC Miner Selling, and more

07/26/2023 0 Comments

1. Record-Breaking Bitcoin Mining Difficulty Coincides with Surge in BTC Miner Selling

Exchanges have been inundated with an overwhelming influx of Bitcoin miners in the past few weeks, as the network’s difficulty metric reached an unprecedented peak. A staggering 53.91 trillion units now represent the immense challenge of mining Bitcoin blocks, marking a significant milestone on July 12. The sheer volume of BTC flooding these exchanges adds to this remarkable occurrence.

Every two weeks, the blockchain intelligently modifies its difficulty to uphold the target processing time of roughly 10 minutes. With the network’s increasing computational strength, the difficulty level rises to present a tough obstacle for miners, reducing the profit potential for each individual involved in the procedure. As a result, this recent adjustment heightens the strain on miners, who have been steadily selling their mined BTC since June.  The blockchain’s dynamic nature is seen from the way it modifies its difficulty every two weeks to maintain a constant processing time of ten minutes. The system adapts as network processing power grows, making mining harder and less profitable for individual miners while preserving the network’s stability and security.

Insightful experts speculate that the absence of miners accumulating bitcoins has probably hindered the potential upward surge in BTC’s price. Following the recent adjustment in difficulty, it is anticipated that medium- and small-scale miners will experience a significant drop in profitability, causing them to deactivate certain ASIC hardware temporarily. The expected surrender of less powerful miners might, though, act as a trigger for bigger miners to seize the chance and amass Bitcoin, thus potentially easing the existing pressure from mining-related sales.

Miners Under Pressure as Bitcoin’s Difficulty Hits Unprecedented Heights

Bitcoin has attained an amazing milestone this year by raising its difficulty by 3.22% to a record 49.55 trillion. The difficulty is a measure which gauges the level of difficulty in discovering a hash value which meets the requirements for adding a brand-new block on the Bitcoin blockchain. Surprisingly, this increased difficulty comes after a slight 1.45% dip at block height 788,256, where the difficulty stayed at 48.01 trillion for around 2 weeks.

Bitcoin miners are presently adding an astonishing 363.84 exahash per second (EH/s) to the Bitcoin blockchain. The latest increase of 3.22% occurred at block height 790,272, and it is anticipated that the next change in difficulty will occur around May 31, 2023. Recent information shows that block durations are slightly surpassing the customary ten-minute average. More specifically, on May 18, at 7:30 p.m. In the realm of Eastern Time, the time intervals were observed to vary between ten minutes and 12 seconds to a slightly longer span of ten minutes and 33 seconds.

Foundry USA dominates bitcoin mining with hashrate

During the last three days, Foundry USA has emerged as the frontrunner in Bitcoin mining, flexing its impressive hashrate of approximately 109.04 EH/s. This remarkable figure represents about 30.02% of the Bitcoin network’s overall hashrate within that specific timeframe. Coming in second is Antpool, boasting a substantial hashrate of 77.77 EH/s, closely followed by F2pool at 54.52 EH/s and Viabtc at 40.89 EH/s. Binance Pool, ranking fifth in terms of hashrate, currently holds a substantial hashrate of approximately 27.26 EH/s.

Despite the increasing problems presented by escalating difficulty, Bitcoin miners have demonstrated resilience by dedicating substantial computational power to the network. Though BTC prices now remain below the USD 27,000 mark, they’ve nonetheless experienced a notable surge from their value of USD 16,500 recorded on December 31, 2022. Moreover, together with the all-time high (ATH) difficulty observed on May 18, the network’s hashrate attained an amazing ATH on May 2. The hashrate hit a record high of 491.15 exaHash per second (EH / s) at block height 787,895, indicating the miner’s steady commitment to the network’s security and stability.

2. Future of Cryptocurrencies in Business Transactions

Cryptocurrency’s business role explored, focusing on transaction efficiency, education, stability, and fraud prevention in evolving financial landscape.

In a recent roundtable discussion, Roundtable anchor, Rob Nelson and Evelio Medina, President of Downtown Miami Chamber of Commerce, shared their perspectives on the evolving role of cryptocurrencies in business transactions. As Bitcoin and other digital currencies continue to surge in popularity, the question of how they might best be incorporated into traditional financial operations remains a subject of intense debate.

Rob Nelson started the conversation with a clear set of concerns for any business considering adopting cryptocurrencies. “If you’re going to use Bitcoin or any crypto, if you’re going to operate in that space, you want it to be efficient, you want it to be fast, you don’t want it to add layers of complication,” Nelson said. He raised questions about transactional costs and customer convenience, suggesting that these would be key factors for businesses when choosing whether or not to use digital currencies.

Evelio Medina, as the representative of a city that has been at the forefront of embracing cryptocurrencies, responded to Nelson’s points with enthusiasm. He shared that Miami has become an example of how digital currencies can be incorporated into municipal operations, even to the extent that the city’s mayor is paid in Bitcoin. ” Miami, unlike many places, especially after the pandemic, we really went hard,” Medina revealed, followed by a laugh. “it’s a big message.”

He continued to discuss the challenges and opportunities associated with cryptocurrency, emphasizing the importance of education and stability in this relatively new field. “The reality is there’s a learning curve,” he admitted. “I believe that any business that can get those layers out…that’s why there is so much interest in that. There has to be, I always said money, there’s the three rules of money. More is better than less, sooner is better than later and something’s better than nothing. At the end of the day, when there’s certainty, that’s where you have less risk and people want play.”

Medina expressed optimism about the future of cryptocurrencies and the role they might play in global finance. ” If we unite education, if we unite a method or a digital asset that is stable and that you can really get your arms and your mind around it, I think that’s going to be the future,” he predicted.

While excitement and optimism were prevalent, the panelists also noted the potential pitfalls of the rapidly evolving crypto market. Medina explicitly pointed out instances of fraud in the crypto world, such as the situations with FTX and Celsius. “That wasn’t blockchain, that was pure unadulterated fraud,” he stated firmly. ” People have to realize that we need to send that message, that is not blockchain, that is not Bitcoin, that is not crypto.”

3. How Miners Are Preparing for the Next Bitcoin Halving

As Bitcoin’s halving date approaches, miners are already carrying extensive research and planning. They are studying previous halvings’ effects on the Bitcoin network and analyzing how the cryptocurrency market reacted during those times, helping them understand potential challenges and opportunities.

The fourth Bitcoin halving is currently due to occur on April 16, 2024, where block rewards will reduce from 6.25 bitcoin to 3.125 bitcoin, per block.

As a result, miners face double the energy costs to mine a single bitcoin, though they can mitigate these shortfalls by installing more efficient machines, managing their energy use optimally, putting aside cash reserves and hedging the risk on the financial markets.

Let’s consider how miners are preparing on these different fronts.

Efficient mining fleet

Bitcoin miners are looking to upgrade their hardware and software, with a number of North American Bitcoin miners making significant purchases of the most efficient miners available on the market to prepare themselves for the forthcoming halving.

Marathon Digital (MARA) purchased 78,000 units of Antminer S19 XP mining machines, the most efficient machine on the market today, providing close to 11 EH/s in hash rate. The majority of these machines were delivered in 2022 and have been installed and energized this year and will take their operational hash rate in North America to 23 EH/s by mid 2023.

In April 2023, CleanSpark (CLSK) announced a purchase of 45,000 Antminer S19 XP mining machines, once deployed, in Q3 2022, they will provide 6.3 EH/s of additional hash rate taking their total hash rate growth to 16 EH/s by year end.

Riot Platforms (RIOT) announced in June 2023 it had purchased 33,280 next-generation Bitcoin miners from MicroBT, providing an additional 7.6 EH/s miners to increase self-mining capacity to 20.1 EH/s upon full deployment in 2024.

Having control of your sites where the Bitcoin mining machines are installed is really important, as you really need to have control of when machines need to be switched on/off.

Cheap sustainable renewable energy

Energy represents the largest cost incurred in bitcoin mining is the cost of energy used to mine the Bitcoin and as it will continuously double every halving, it’s essential that miners are able to utilize the cheapest sustainable and renewable energy cost available. If they are not able to access fixed price energy contracts, they must have the flexibility in curtailing their energy use as the price rises and therefore becomes unprofitable to mine Bitcoin.

CleanSpark (CLSK) are already developing automation that allows for the maximization of uptime and firmware that provides them the ability to underclock and overclock as the situation presents itself, along with managing their power strategy in Georgia (GA), thereby placing them in a great position come the halving.

We have witnessed in recent months, a number of Texas based miners have been using energy strategies to increase their revenues. Riot Platforms has taken advantage of being active in the Electric Reliability Council of Texas (ERCOT) market, supplying power when needed and switching off their systems to help balance the grid. It has a long-term power purchase agreement in place, enabling tit to keep the cost of mining bitcoin low. Through participation in these programs, during the month of June 2023 the company generated $8.4 million in power sales and $1.6 million in demand response revenue.

Build cash reserves

The previous halving cycles have shown that after the halving occurs and there’s more scarcity of Bitcoin, the price does not immediately increase, as one would expect. During the last halving in 2020, it took close to five months for the price of Bitcoin to gain an upward traction. It is therefore necessary for miners to build cash reserves and have a sufficient cash runway in readiness for the halving to cover the immediate loss in revenues.

Diversification

A number of Bitcoin miners have been recently diversifying their businesses and incorporating additional revenue streams. Hut 8 (HUT) announced in January 2022 that it had acquired the cloud and colocation data center business from TeraGo Inc, a data center business. Once complete, the acquisition will establish Hut 8 as a leading high-performance computing platform, providing unique positioning for the company within the digital asset ecosystem.

In June 2023, the company also announced a five year partnership with Interior Health Authority, British Columbia to support their operations by delivering safe, secure, and reliable colocation services from the company’s flagship Kelowna data center.

Hive Digital Technologies (HIVE) and Iris Energy (IREN) are also diversifying into high performance computing, cloud and artificial intelligence services.

Hedging techniques

There are now companies that offer their service to help mining companies hedge their risk, in terms of electricity cost and hash rate. This may provide an opportunity for miners to consider in the run up to the halving.