Bitcoin mining difficulty increases amid revenue decline for miners

Bitcoin’s (CRYPTO:BTC) mining difficulty increased by 2.99% on August 28, 2024, reaching 89.47 trillion at block height 858,816.

This rise in difficulty presents new challenges for miners who are already facing declining revenues.

The adjustment, which raised the metric from 86.87 trillion, is part of the network’s automatic mechanism to maintain a steady block creation pace in response to changes in mining power.

Bitcoin's difficulty metric works like a self-adjusting system, modifying itself based on the amount of computational power, or hashpower, dedicated to the network.

When blocks are mined too quickly due to a surge in hashpower, the difficulty increases.

Conversely, if the hash rate drops and block production slows, the difficulty decreases.

With the current difficulty setting of 89.47 trillion, mining Bitcoin has become 2.99% harder for the next 2,016 blocks, just below the all-time high of 90.66 trillion from July.

This increase comes as Bitcoin miners are seeing shrinking earnings.

The hashprice, or estimated daily earnings per petahash per second (PH/s), has been on a decline since August 25, dropping from $47 to just over $42 per PH/s.

This reduction in hashprice is affecting even the largest publicly traded mining companies, adding financial pressure to their operations.

As a result, mining activity is becoming increasingly centralized within a few dominant mining pools.

Currently, two major mining pools, Foundry USA and Antpool, control a significant portion of the Bitcoin network, contributing 28.6% and 25.86% of the total hashrate, respectively, over the past three days.

Other significant players, such as Viabtc and F2pool, hold 11.44% and 10.98% of the hashrate.

Together, these four pools account for 76.88% of all Bitcoin blocks mined in the last 72 hours, highlighting the concentration in Bitcoin mining.

The increased difficulty, coupled with declining revenues, underscores the challenges faced by Bitcoin miners, raising concerns about the sustainability and centralization of mining in the cryptocurrency sector.

At press time, the Bitcoin price was $59,218.10.