Bitcoin (BTC) Mining Difficulty Picks Up in the Past Quarter Amidst Price Rise
Mining is speeding up ahead of next year’s reward halving, and the past quarter saw increased hashrate and difficulty.
Bitcoin (BTC) saw another large jump in difficulty, extending the total difficulty gains to more than 22% in the past three months. The difficulty is an indicator of how competitive mining has become.
The increase in mining activity coincided with significant price gains, as BTC doubled in price from the $4,000 range and touched $9,000. The rise in prices compensated the competitive mining, as block rewards were worth more on the open markets. BTC prices remained above the breakeven levels for Chinese markets, and multiple other mining farms have the potential to break even.
The heightened mining levels match the predictions for a strong performance in May, as Chinese mining makes use of the wet season to gain cheap hydroelectric power. In the past few days, mining has risen to an all-time high above 60 EH/s, not hampered by the higher difficulty.
Mining is also becoming more efficient as the latest Bitmain rigs are shipped to farms and come online. In general, mining manages to make all-time highs, though not as dramatic. The other coin to gain from new rigs and increased interest in mining is Litecoin (LTC), where mining is at peak levels before the halving in August.
The high level of mining activity shows that there are enough entities betting on the future of Bitcoin, and investing in its network. Skeptics point out that Bitcoin’s annual energy usage sits between the energy consumption of Switzerland and the Czech Republic. Energy usage for the network has grown by about a third since January’s lows, and miner activity seems to be following the market price growth.
But Bitcoin’s energy use is not as straightforward. Based on the latest CoinShares report, around 74% of all energy for the network is supplied through clean, renewable energy sources. For the first time, mining is not only a competition of electricity consumption - improved mining machines actually make the activity significantly more profitable. The arms race is now not for energy, but for the best machines.
The report shows that at energy prices of 5c per Kw/h, the breakeven price for BTC is just $3,300. The best mining regions include ample hydroelectric power and cool climates, to help with machine cooling naturally: Scandinavia, The Caucasus, The Pacific North West, Eastern Canada, and Southwestern China.