Bitcoin mining is more difficult than ever

Bitcoin’s mining difficulty is at all-time highs – and with it, the difficulty of turning a profit. Revenues from the computer rigs that secure the world’s most valuable blockchain are at 12-month lows.

Miners’ use of electricity – including its financial cost and environmental impact – is at an all-time high. Worse, this top expense of mining companies is accelerating. Since the beginning of 2023, Bitcoin’s hashrate increased 91% from 256 exahashes per second to a record 746 exahashes per second this month.

A smoothed trend line of hashrate, which varies considerably day-to-day, trends up-and-to-the-right along a rarely interrupted vector.

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Earlier this year, the hard-coded reward for solving Bitcoin’s computational puzzle halved from 6.25 to 3.125 BTC per block of transactions. That instantly reduced miners’ revenue – which is at a 12-month low.

Making matters worse, Bitcoin’s difficulty adjustment adjusts upward as more mining rigs come online. Yesterday, it upticked 3.58% to another all-time high, further reducing the expected reward for newly deployed mining rigs.

Amid all of these costs, bankruptcies and financial troubles at mining companies are proliferating.

Rhodium declared bankruptcy and is trying to sustain operations via debtor-in-possession financing. As of their latest quarterly reports, Core Scientific, Griid, Greenidge Generation, and Argo Blockchain all admitted to owing more debt than assets. The founder of BitFarms resigned a month ago.

Of the 24 largest publicly traded bitcoin miners, 20 have declined in price over the past 30 days.

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