Bitcoin mining difficulty, momentum to update record high | coindesk JAPAN | Coindesk Japan

Bitcoin mining difficulty is set to hit a record high of 50 trillion on May 31 (Eastern time), and may rise further.

Due to the rising Bitcoin price since the beginning of the year and the popularity of Ordinals, so-called Bitcoin NFTs, the profitability of miners (mining operators) has improved, and miners are continuing to introduce many mining machines. The result is more computing power, leading to record mining difficulty.

Bitcoin mining difficulty is automatically adjusted to keep the time to mine one block around 10 minutes.

“The new generation of machines will do more as rack space becomes available,” said Ethan Vera, COO of mining services firm Luxor Technologies.

Meanwhile, the popularity of the Ordinals protocol has driven transaction fees on the Bitcoin blockchain to nearly three times higher than normal, boosting miner revenue, Vera said.

Ordinals made it possible to issue tokens such as NFTs on the Bitcoin blockchain. As a result, the number of transactions has increased and transaction fees have soared.

CoinDesk/Sage D. Young

An increase in mining difficulty means a decrease in profitability for miners. Major miner Marathon Digital said monthly bitcoin mining volume fell month-on-month due to the increase in difficulty in April. Similarly, Canadian miner Bitfarms lost money in the fourth quarter of 2022 due to increased difficulty.

But there are also multiple factors that could slow down the difficulty growth.

According to Greenidge Generation Treasurer Tim Rainey, the lack of positive Bitcoin price action and limited available infrastructure could be factors.

Foundry senior business development manager Charles Chong also said uncertainty around the next Bitcoin halving could also dampen the rise in difficulty.

On the other hand, the concentration of computing power in one region can also affect the increase in difficulty.

“The concentration of computing power in North America is creating new seasonal trends,” said Colin Harper, head of content research at Luxor Technologies. In the past, when China entered the rainy season, cheap hydroelectric power became readily available and computing power increased.

But now, when a summer heat wave hits the US, miners are forced to shut down their machines to save energy needed for cooling.

｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
| Image: CoinDesk/Sage D. Young
｜Original: Bitcoin Mining Difficulty’s Record Setting Streak Shows No Signs of Stopping