The Bitcoin network is in good shape

The Bitcoin network appears very strong at this time, with mining activity growing steadily along with hashrate and difficulty parameters. 

This scenario appears despite the fact that the prices of the major cryptocurrencies in the sector are not giving satisfaction to investors.

The network’s hashrate and difficulty hit their all-time highs on 11 and 14 June, respectively, showing that there is still interest from miners.

Full details below 

Bitcoin mining: hashrate is up despite bearish price action in May

The cryptocurrency market is still experiencing its speculative fragility with major asset prices in the red in May, but in parallel we have witnessed a further increase in the Bitcoin hashrate.

The computing power index of the world’s most decentralized network hit a new all-time high of 515.61 exahash per second (EH/s) on 11 June at the 793,868 block height.

On average during the last 2,016 blocks the hashrate has maintained a constant average of 382.7 EH/s while during the last 90 days the share has averaged 356.2 EH/S.

The figure is very positive because it indicates that there is interest on the part of miners to increase their share in the computational power market in order to mine as much BTC as possible.

Even though the price of Bitcoin does not seem to be exciting in the last 2 months, there are still those who continue to accumulate, both satoshis and computational power.

Miners, especially the larger companies, want to hold a slice of the network at all costs and are constantly increasing their share of hashrate to do so.

Foundry USA is a mining farm that holds about 30% of all the computational power in the network. In the past 30 days it has solved about 1,431 blocks out of a total of 4,442 mined, taking home 8,943.75 BTC from the block reward, to which transaction fees must be added.

Following the companies with the most market share in this context are Antpool, F2pool, Viabtc, Binance Pool, and Luxor Tech, respectively.

Mining: Bitcoin hashrate hits new all-time high as network difficulty prepares for new rise

As the Bitcoin network hashrate continues to scale new heights, the difficulty adjustment also marks a new all-time high as it prepares for another increase in block mining difficulty.

In detail, on 16 June the blockchain reached a difficulty level of 224.8 zetahash, which represents the amount of computing power required to successfully resolve and mine a block on the network.

Added to this is the fact that according to forecasts, on 27 June the figure will experience another estimated increase from 2.1% to 2.33%

In fact, since the average time to generate a block is currently less than the average of 10 minutes, more precisely in a range from eight minutes and 52 seconds to nine minutes and 44 seconds, it will be necessary to make this practice more difficult.

This would be the fourth consecutive increase in mining difficulty for Bitcoin miners.

Over the last 3 difficulty adjustments since 18 May 2023, the metric has increased by 8.8%.

Such short average block resolution times are justified by the fact that miners, in an effort to bolster their share of computing power, are deploying more powerful hardware capable of calculating more hashes per second than previous versions.

Some research shows that the largest mining pools are taking advantage of ASIC (Application-Specific Integrated Circuit) mining platforms that perform better than any other machine on the market.

In itself this is not a problem for the Bitcoin network since the difficulty mechanism regulates and minimizes the risk of these entities being able to mine large amounts of BTC in too short a period of time.

However, those who are being penalized are the small domestic miners, who with mediocre devices can no longer be profitable. 

How profitable is the miner business

It is not easy to make an accurate estimate of the profitability of Bitcoin mining because of the continuous fluctuation of some variables such as hashrate and network difficulty.

In addition, the profit expected by those who mine also depends on the cost of electricity, which varies from country to country and can be minimized through the use of renewable sources, which, however, have a high cost of installation.

Then there are to be added all the costs related to the hardware (and its cooling) that must be implemented to be able to compete with the rest of the world, which are by no means to be underestimated, and in fact correspond to the biggest expense for those who want to try their hand at cryptocurrency mining. 

Finally, in no particular order of importance, there is the price of BTC, which being extremely volatile does not guarantee security from this point of view

As such, it is not possible to determine with certainty how profitable this activity can be, without constentualizing a minimum of the initial hardware investment, the cost of energy, network data, and the price action of BTC.

What we can do is infer that those who have large capital to invest and can pay little for electricity, and most importantly do not need to sell their share of mined cryptocurrencies month by month, will always manage to be profitable in the long run.

In fact, many mining farms sell only a portion of the mined BTC periodically, while keeping another slice in holdings, ready to unload it at the height of the bull market.

With a view to identifying how profitable this activity is, we can also calculate the revenue (in USD and BTC) for each exahash supplied to the network.

Looking at Glassnode‘s graph we can easily see that currently for each exahash a miner would be able to extract about 2.48 BTC, which corresponds to a counter value of $65,945.

Granted that the value of BTC can easily vary, which we well know, this is what is mined on average at the moment.

At this point dear readers, do your math with the cost of electricity, the cost of hardware needed to undertake the activity (and the time it takes to produce 1 exahash), and most importantly do not forget about your friend called “State” who will kindly ask you for a tax on what you convert into FIAT.