Bitcoin Difficulty Adjustment Forecast Puts Miners At A Disadvantage

Home » Bitcoin Difficulty Adjustment Forecast Puts Miners At A Disadvantage

The bitcoin mining difficulty had dropped over the month of September, which led to a large increase in the bitcoin hashrate. It had hit a new all-time high and saw a high block production per hour. Now, miners are beginning to bring their new, more efficient mining machines only. This has led to forecasts that the mining difficulty is about to see a massive adjustment in the coming week.

A 12% Difficulty Adjustment

The bitcoin hashrate had hit a new all-time high of 260 exahashes per second as the market opened into a new month. In the same one-week period, miner revenues had also jumped, leading to a 10.3% increase at this time. Block production rate had grown 8.4% to the new 6.45 blocks per hour. A good week for bitcoin miners, but as has been the case so far in 2022, this is not expected to last.

Forecasts coming out of the sector are saying that the bitcoin mining difficulty is expected to adjust by 12% next week. If this happens, it will be the highest difficulty adjustment so far for the year 2022, but a number of factors make this a possible outcome. 

BTC falls below $20,000 | Source: BTCUSD on TradingView.com

For the bitcoin hashrate to reach its new all-time high, it had grown 11% in the space of a week. A result of the same factors that are expected to contribute to the expected rise in difficulty. Bitcoin miners have been expanding their infrastructure at a fast pace, most of which was put in place during the bull run of 2021. These new infrastructures are also coming with new and improved miners that have been proven to be more efficient.

Additionally, the temperatures around the world are beginning to lower, meaning that there is more energy available for miners to put into their activities. All of this is expected to contribute to a rather large difficulty adjustment next week.

Bitcoin Miners Should Ready Themselves

The profit margins of bitcoin miners have suffered terribly in the bear market. With BTC’s price dropping so close to production values, miners have had a hard time turning a profit from their operations, and the expected mining difficulty adjustment threatens their margins even further.

Competition continues to grow in the space, so even though miner revenues were up last week, it does not translate to profit for these miners. Glassnode estimates that miners are spending $18,300 to mine a single BTC. At a price below $20,000, miners barely see a $1,000 profit margin for each BTC they mine.

Nevertheless, miners continue to expand their production capacity by buying new equipment and kickstarting new locations. Public bitcoin miner Marathon Digital reportedly mined 100% more BTC in September than it did in August. The miner’s numbers came out to 360 BTC mined for the month, bringing its total BTC holdings to 10,670 BTC ($215 million).

Featured image from Yahoo Finance, chart from TradingView.com

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