The price of Bitcoin may have recently dropped, but there is one indicator that is still impressive: mining difficulty. Data from BTC.com shows that Bitcoin’s difficulty reached a new all-time high on Wednesday (31), with 90.67 trillion hashes.
Hash is a mathematical function performed by Bitcoin miners as part of the blockchain security process. The higher the difficulty, the more computational power – and energy – is required to do the work.
The record difficulty “significantly reduced margins for publicly traded mining companies,” said Nishant Sharma, founder of BlocksBridge Consulting, a communication and research company for the Bitcoin mining industry, to Decrypt.
“[The difficulty level] is forcing them to diversify into new sources of revenue or double down on Bitcoin in hopes of a bull market,” he said.
“Those who are diversifying are repurposing their mining infrastructure for high-performance computing applications, such as AI,” Sharma added. “Meanwhile, those who are doubling down are holding or buying more Bitcoin, following the example of MicroStrategy, which essentially acts as a Bitcoin ETF.”
Bitcoin miners are typically large operations that keep the network running by processing new transactions, with large warehouses full of computers. Miners are rewarded with Bitcoin for each block they process. But with mining difficulty at a new peak, they have to work harder to stay in business. In fact, some miners are having to close their doors completely because the process has become too expensive.
In April, the Bitcoin network underwent an event called halving. The update – which occurs every four years – cut miners’ rewards in half, from 6.25 BTC for each processed block to 3.125 BTC.
The event naturally forces miners to work harder, which means that eventually only the most efficient operations in the industry remain in the game to keep the network running.
The price of Bitcoin is currently at $61,550, a drop of over 10% in seven days. The asset reached a new all-time high in March of $73,737.
*Translated and edited with permission from Decrypt.
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