Bitcoin (BTC) miners constantly generate hashrate in a highly competitive business to mine the next valid block. The mining difficulty might increase on January 6, propelling the already high costs of mining Bitcoin.
Essentially, the mining difficulty adjusts automatically every 2,016 blocks — around two weeks. This keeps a 10-minute block interval, despite the network’s global hashrate changes.
The more hashrate the miners produce, the faster they discover blocks. Therefore, the mining difficulty also increases to control Bitcoin’s inflation. On the other hand, a drop in hashrate slows down block discovery, requiring difficulty to adjust downwards.
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Interestingly, Bitcoin mining is a high-cost business model that requires a physical structure, specialized equipment (ASICs), high consumption of energy, and specialized know-how.
Miners work with the expectation of discovering the next block and collecting the 6.25 BTC (~$275,000). However, most mining companies have been operating with losses for years and threatened to have their costs increased with the constant difficulty adjustments.
Bitcoin mining difficulty is expected to increase by 1.78%
Finbold gathered data from mempool.space to forecast the next adjustment, expected to January 6, in 31 hours from press time.
In particular, this data estimates a 1.78% mining difficulty increase after the remaining 186 blocks. Previously, the mining difficulty surged by 6.98% to 72.01 trillion hashes needed to mine a single block. All this happens amid new hashrate highs of 634.6 EH/s.
Bitcoin mining difficulty adjustment and hashrate dashboard. Source: mempool.space
Notably, the higher the costs, the more BTC mining companies must sell to cover expenses. This can negatively affect Bitcoin’s price in the cryptocurrency market due to increased selling pressures.
Further, less profitable miners could be forced to close operations, centralizing the network’s hashrate in fewer entities.
In conclusion, Bitcoin miners directly depend on the BTC price going up while they are a relevant source of selling pressure and price suppression, paying for their high costs constantly getting fuelled by mining difficulty adjustments every two weeks.
