As Bitcoin’s total hashrate continued to recover, cryptocurrency miners may soon be hit with another increased mining difficulty tonight.
The Bitcoin mining difficulty level is expected to increase by over 3% for the next adjustment, according to data from BTC.com recorded on Tuesday afternoon Hong Kong time.
The upcoming adjustment follows four increases after four consecutive declines since May when China intensified its clampdown on the sector.
The last difficulty adjustment, made on Sept. 8, saw the difficulty increase 4.54% to 18.42 trillion at block height 699,552, following the Aug. 25 increase of 13.24%, the data showed.
Bitcoin mining difficulty is a measure of how hard a miner would have to work to verify transactions on the block, or “dig out” Bitcoins. The difficulty level undergoes an adjustment every 2,016 blocks, which usually takes about two weeks.
Such mining difficulty adjustments are highly correlated to the changes in mining hashrate, which refers to the level of computing power required to mine. The more difficult to mine Bitcoin, the less profitable for miners.
When the hashrate increases, the mining difficulty typically follows. That said, the expected mining difficulty increase could be largely due to a recovering hashrate.
The total Bitcoin hashrate has been steadily recovering since July 3, as suggested by data from Blockchain.com. The total hashrate had been nose-diving from mid-May, plunging from 180.67 million terahashes per second — an all-time high — to 84.79 million on July 3, the lowest since September 2019, according to the data.
On Monday, the hashrate reading was at 139.54 million TH/s.
Growing demand
The hashrate increases suggest many miners are plugging back online as they settle outside of China, following an exodus triggered by the country’s crackdown on crypto mining.
That has boosted the orders for mining rig makers. For example, in the second quarter of this year, Chinese crypto mining rig maker Canaan Inc. reported a 507.3% year-on-year growth in total net revenues and a 168.6% quarter-on-quarter increase, according to the company’s second-quarter report.
The robust revenue growth was “mainly due to the substantial increase in total computing power sold,” Nasdaq-listed Canaan said.
The cryptocurrency mining space continues to see demand for mining machines. Genesis Digital Assets, one of the world’s earliest Bitcoin mining companies, recently signed a deal with Canaan for 20,000 mining rigs, with the option to purchase up to 180,000 additional mining machines.
Last month, Mawson Infrastructure Group, an Australian crypto mining company, said it had purchased an additional 17,352 ASIC Bitcoin mining machines from Canaan to bolster its mining operations on its home turf and in the U.S. HIVE Blockchain Technologies, a Vancouver-headquartered crypto mining company, has also bought thousands of machines from Canaan.
Meanwhile, Canaan’s major rival Bitmain, another major Chinese crypto mining rig maker, is no slouch when it comes to securing new deals.
For example, New York-based Greenidge Generation Holdings Inc. said last week it was buying 10,000 Bitcoin mining machines from Bitmain for its upcoming facility in South Carolina, according to a company statement.
Continued hold-down
Meanwhile, China has shown no sign of slowing down its clampdown. The Inner Mongolia region — once a thriving cryptocurrency mining hub that has enacted a series of measures to rein in the sector — has been tightening its crackdown by hiring a contractor to monitor and ferret out mining operations.
Last week, authorities in North China’s Hebei province also issued a notice to crack down on cryptocurrency mining and trading activities, saying that crypto mining consumes huge amount of energy and the wide use of cryptocurrencies could “severely impact the development of the economy and the society and directly threatening national security.”
Earlier this month, authorities in Lanzhou, the capital city of Northwest China’s Gansu province, worked with the local branch of State Grid to investigate crypto mining activities, according to a report from Yinda Media Group, a publication operated by a unit of State Grid.
Some countries in western and central Asia are also actively busting illegal crypto mining activities. Kyrgyzstan recently spotted over 500 crypto mining farms that were illegally connected to power grids, leading to power shortages, local media outlet 24.kg reported Saturday, citing a release from the State Committee for National Security of Kyrgyzstan.
Iran has also closed down thousands of unauthorized mining facilities, according to local media reports.
