Countdown to Biggest Bitcoin Mining Difficulty Drop in 2022; Does mining become more profitable?

The Bitcoin mining difficulty reset happening in about 3 days might be the biggest difficulty drop this year. This significant change can make miners’ activities easier than before in the current difficult conditions.

To Report “The Block”, the difficulty of Bitcoin mining will be reset on Tuesday this week, and according to estimates, the difficulty of mining this digital currency will decrease between 8 and 7% during this period. Platforms that predict changes in this rate, including Luxor, Braiins, and Bitrawr, respectively, expect a mining difficulty of 7.98%, 7.9%, and between 7.9 and 7.5% during this period. Decrease.

These estimates may change during the remaining days until the new period, and its changes depend on how many miners turn on or off during this period. Despite this, the picture that these estimates give us is a good representation of the current state of the mining industry.

Many miners have already suffered losses. One of the largest of them in terms of hash rate is Core Scientific Group, which according to its managers, may soon declare bankruptcy. Mining industry activists, affected by the increase in energy costs and the decrease in the price of Bitcoin, have endured a lot of pressure during this time, and some groups are obviously facing a liquidity crisis and heavy debts.

Ethan Vera, one of the managers of the Luxor complex, said:

Resetting the difficulty of Bitcoin mining in this period will be accompanied by a significant decrease, and the reason for this is that the Hash price will reach its resistance levels at the same time as the profitability of mining becomes negative.

Hash price or hash price is the income that miners earn per unit of hash rate (for example, trahash per second) in a certain period of time (for example, a day).

Vera added:

Many miners who are now in a state of chaos are shutting down their rigs and moving elsewhere. [با هزینه انرژی کمتر] and this flow will put more downward pressure on the network hardness.

Jeff Burkey, Vice President of Business Development at Foundry, says:

Decrease [شدید] The difficulty of mining bitcoins in this period is the result of the stoppage of miners who have turned off their devices due to lack of profitability.

William Foxley, Media Manager of Compass Mining said:

I expect to see another decrease in mining difficulty; Because it is not profitable to sell miner devices at current prices. Many miners of the S19J Pro model are no longer efficient in the current situation.

With the increase in the supply of ASIC devices to the market, the price of these miners has decreased by about 80% compared to December last year.

Also read: miner price in Iran market; Factors affecting the price of the extraction machine

The difficulty of the network is actually the degree of difficulty or complexity of the processes related to Bitcoin mining, which is automatically reset approximately once every two weeks (every 2,016 blocks) in accordance with the overall hash rate. It should be noted that the hash rate of Bitcoin has decreased by more than 7% since the previous reset period on November 20 (November 29). The biggest decrease in hardness in 2022 also goes back to July, which was associated with a 5.01% drop in this rate.

Reducing the difficulty of mining to this extent can provide some breathing room for miners in the current difficult situation.

Vera said in this regard:

This difficulty reduction will benefit miners who have low operating costs and high productivity devices and can cope with the low hash price in this situation.

The change in extraction difficulty during this period is in complete contrast to the increase in difficulty at the beginning of October. Kevin Zhang, vice president of the foundry complex, said that the reason for this increase in hardness at the beginning of autumn was that the temperature was mild this summer, and therefore miners saw this period as a good opportunity for activity, along with the easing of operational restrictions. .

In addition, the new generation of Bitcoin miners, including the Antminer S19 XP with 140 terahertz processing power, are now deployed in mining farms.

Vera added at the end:

In the first half of the fourth quarter of 2022, we saw the release of a new generation of Bitcoin miners and their deployment in mining farms; An event that will end at the expense of farms with old and more expensive devices.