Roughly every ten minutes, a new block full of transactions is added to the Bitcoin (BTC) blockchain. BTC miners take on this task and are rewarded for it in the form of the crypto itself. The profitability of these miners often depends on the bitcoin price and the so-called mining difficulty. The latter refers to the difficulty of the mining process, which has risen to a new all-time high amid rising competition in the industry.
Bitcoin mining is getting harder
Data from BTC.com shows that the difficulty level increased by 3.22 percent on the previous adjustment to a new one all time high of 49.55 T. Every 20,019 blocks, which is approximately 2 weeks, this difficulty is adjusted to keep the block production rate on the network constant at around 10 minutes. Of the last 10 adjustments of this mining difficulty, it was adjusted upwards no less than 8 times. The increases in the difficulty level also came out a lot higher than the decreases.
The level of difficulty and the hash rate, or the total computing power of the network, go hand in hand in a sense. An increasing hashrate indicates higher competition on the network and results in an increasing difficulty. If the network were to ignore this adjustment, this would lead to faster block production, resulting in a faster issuance of new bitcoins.
The hash rate has also been on the rise in recent weeks: according to BTC.com, the total computing power currently stands at 365.65 exahash per second (EH/s). A higher hashrate means that competition is increasing and also means that the network becomes more secure and reliable.
Bitcoin transaction fees
While the hype about non-fungible tokens (NFTs) and especially BRC-20 tokens on the Bitcoin network rose to a peak, the blockchain became extremely popular, resulting in a significant increase in transaction costs. Binance even decided to temporarily stop the recordings for this. For the average user, this situation was anything but desirable, but for the BTC miners, these increased transaction costs resulted in more income.
Meanwhile, the hype about Ordinals, the ‘culprit’ of the network congestion, has dropped considerably and it is again a lot cheaper to perform transactions on Bitcoin’s network.