Bitcoin Miners Under Immense Pressure as Mining Difficulty Increases by 13.55%

Bitcoin mining difficulty surges to an all-time high by around 13% as Bitcoin network fundamentals continue to eat up the market.

Bitcoin Mining Records

As per records obtained from btc.com, the latest bitcoin mining difficulty adjustment currently stands at 35.6 trillion hashes to mine one bitcoin (BTC), up an outstanding 13.55% from the previous measure in May 2021.

For every 2,016 blocks, the Bitcoin code includes a difficulty adjustment mechanism that controls the mining process to allow block validation at intervals of ten minutes. On average, mining the 2,016 blocks takes around two weeks. The size and direction of the adjustment are determined by the total computing power used to mine bitcoin, and the goal is to keep block verifications coming every ten minutes.

Bitcoin Network Hash Rates

As per blockchain.com, the current network hash rate is 257 million terra hash algorithms for every second (TH/s), a significant increase from this time a year ago when it sat at around 140 million TH/s. The Increasing difficulty portrays an even bleaker picture for bitcoin mining firms, who are already feeling the intense pressure from falling bitcoin prices and increasing energy prices.

Two recent examples include London-based miner Argo Blockchain (ARBK), which was forced to raise $27 million last week in order to relieve liquidity demands, and mining data center provider Compute North declared bankrupt.

Peter Wall, the Chief Executive Officer of Argo, stated publicly that the profitability of Argo was sandwiched under immense pressure emanating from both ends; the hiking energy prices as well as the plummeting Bitcoin prices. Wall added:

“Our profitability has been squeezed from both sides from higher energy prices to lower bitcoin price; that’s resulted in a cash crunch for Argo.”

September CPI Macro factor Outcome Likely to Affect Bitcoin Mining Further

In terms of the macroeconomy,  more than enough potential BTC price triggers may display in their works during the week. From Oct. 12, 2022, economic data will be released in a frenzy, and with tensions in the Russia-Ukraine war reaching new heights, commodity market shocks will remain a surprise.

Whereas the orientation of Consumer price expectations is likely less mysterious based on previous prints, each print tends to cause unusual volatility in the market characterized by ‘fakeouts’ both up and down.

If the trend continues from the previous month, trades based on speculation, both long and short, could be liquidated in bulk. More uncertainty and volatility are expected as the CPI increases, making it a potential hazard to the mining firms when BTC drops in value.

A researcher named Checkmate concluded that:

“This risk could manifest as a second-stage miner capitulation, with around 78.4k BTC still held in miner treasuries. It is extremely unlikely this full amount would be distributed; however, provides an upper bound gauge on the potential risks at hand.”

Even if the price drops, researcher Checkmate believes it is highly unlikely that miners will sell their whole inventory, which is currently worth just under 80,000 BTC.