Mining Bitcoin Is Now Easier

Mining Bitcoin just grew easier amid recent weeks’ crypto market’s swoon, although experts say this trend is unlikely to continue.

The network’s difficulty fell on Sunday from over 114 trillion to 110.5 trillion, according to data provider CoinWarz. The drop coincides with Bitcoin’s price plummeting; on Wednesday afternoon, BTC traded below $83,000 for the first time since early November, as reported by crypto data provider CoinGecko.

Declines in mining difficulty during bear markets are typical. As prices dip and demand wanes, some companies may cut their mining capacity, pulling devices offline to conserve power. This latest drop also coincides with a brutally cold winter spell in many parts of the U.S., increasing energy prices.

When markets flourish, the mining network grows, increasing difficulty. Throughout Bitcoin’s 16-year history, difficulty has spiked as the expanding network has required more computing power and energy. Increases in difficulty signal that the network is becoming more secure.

Nick Hansen, CEO and co-founder of the Luxor mining pool, said, “Energy across the U.S. is elevated due to winter conditions. There is more demand for energy which drives up the prices of mining operations.”

He added that a combination of higher overall energy costs along with a general dip in price has caused some mining operations to curtail their activities more than they normally would.

Bitcoin Mining Reset

Curtis Harris, senior director of growth at mining services provider Compass Mining, mentioned that the recent slight pullback could signal a reset as miners adjust to Bitcoin’s slump while managing energy costs, infrastructure constraints, and slower next-generation hardware deployment.

Mining difficulty hit new highs in January when Bitcoin set a record price over $108,000. Miners, large industrial banks of computers that receive BTC rewards for processing transactions on the blockchain, often welcome brief decreases in difficulty as operations become easier and more profitable. However, the price drop has been significant, according to Ro Shirole, chief business officer at BlockMetrix.

“The network shrinking helps miners, but the price drop outpaced the percentage of network shrinkage,” he noted, adding that miners only rejoiced for about five minutes.

Bitcoin’s mining difficulty adjusts after every 2,016 blocks processed, occurring on average every two weeks. A difficulty of 110.5 trillion means it is now 110.5 trillion times harder to mine the asset than when the first block was mined in 2009.

Despite the recent decline in difficulty, Scott Norris, CEO of independent Bitcoin miner Optiminer, noted that North American operations were expanding, which would lead to network growth. “Miners can enjoy the adjustment down for the moment, but it’s about to go up,” he said.

Edited by James Rubin