On Tuesday, June 16th, Bitcoin mining difficulty was raised by nearly 15% – the difficulty hike was higher than any other since January 2018. Bitcoin mining difficulty describes the relationship between mining efforts vs rewards and the recent blockchain mining difficulty level was just set to 15.78 trillion. At current difficulty levels, miners are faced with one of the most difficult periods for mining since Bitcoin mining began.
There has been a lot of talk about the implications of the recent halving event that brought rewards down to 6.25 BTC per mined block from the previous 12.5 BTC. Not only has there been no shortage of speculation as to where prices might now go, but many have begun to question what mining will look like going forward since it is now more difficult that ever to mine the popular cryptocurrency.
To the relief of many miners, there have so far been two reductions in difficulty since the halving event making it easier to get freshly ‘minted’ Bitcoins onto the market. However, with the recent hike in mining difficulty hitting a multi-year high, that relief has come to an end for many.
One of the major concerns that came from the increased difficulty following the halving event was how much of the mining equipment in use would still be viable with the greater need for efficiency and speed. In fact, many smaller Bitcoin mining firms around the world were forced to close their doors once it became impossible for their equipment to keep up with the demand.
When the mining difficulty rate drops of May and early June came along, some of those mining farms were able to come back into the fold, but now it seems they will be forced out once again.
To add an additional challenge to miners working with dated equipment, many of the world’s largest mining farms – especially those in China – have been gearing up for the increased difficulty to stay ahead of the curve. With many now operated on brand new mining systems, the average hash rates being processed are considerably higher than they were just a few months ago.
The hash rates for the two-week time were around 98 million TH/s leading up to the halving event, but rates pushing nearly 115 EH/s is now considered competitive. Many miners do not have the ability to upgrade to those levels which means Bitcoin now has a new class of mining firms and equipment that is much harder to rub shoulders with.
To stay relevant, miners will have to opt for the latest equipment, of course. Machines like the AntMiner S19, for example is far superior to any of the previous generations of the same name. With capabilities of processing more than ten times what older machines could while using marginally more power, only those with the capital to invest will be able to mine Bitcoin moving forward.
While the change in landscape for miners does not necessarily imply a change in the expected scarcity levels of Bitcoin, it certainly changes the ways new Bitcoins will come onto the market. Now, more than ever before, new coins will be minted from some of the largest mining farms in the world.