Bitcoin mining difficulty measures how tough it is to find new blocks on the Bitcoin blockchain. The network recalibrates this figure every 2,016 blocks, roughly every two weeks, to ensure a consistent block discovery pace. 

In 2024, the difficulty has adjusted 23 times, with nearly 60% of these shifts making the process more arduous. Rising difficulty amplifies the pressure on miners, directly affecting their profitability and long-term viability. Smaller, privately owned mining firms bear the brunt of these changes. Unlike larger, publicly traded companies, smaller operators often struggle with limited capital, making it hard to upgrade equipment or sustain operations during tougher times. 

Bitcoin Hashrate Hits Record 755 EH/s

Last week, Bitcoin’s hashrate—a metric for the total computing power used in mining and processing transactions—hit a record seven-day average of 755 exahashes per second (EH/s). This milestone marks the first time the hashrate has surpassed 750 EH/s, as reported by The Block. The rise indicates miners’ collective push to boost their capabilities and stay competitive amid growing difficulty.

Hashrate holds great importance due to its direct link to network security and transaction speed. A higher hashrate signifies more computational power securing the blockchain, leading to faster and safer transactions. However, it also demands more advanced equipment and higher energy consumption, increasing challenges for smaller mining operations.

In October, Bitcoin’s hashrate experienced a dramatic 12% surge in a single day, one of the largest jumps this year, according to Glassnode. This sharp increase highlights the fierce competition in mining and the swift adoption of new technology by miners aiming to enhance efficiency and maximize profits.

Financial Strain on Small Miners

Mining Bitcoin demands intense competition and significant capital. Smaller mining companies often face financial challenges compared to their larger, publicly traded counterparts. Rising difficulty levels further strain their ability to keep operations running smoothly. Consequently, many smaller miners must sell Bitcoin to fund ongoing activities, potentially increasing market sell-side pressure.

Currently, miners are spending their entire Bitcoin output. In October, however, miners briefly held onto a portion of their Bitcoin, replenishing reserves depleted during August and September. Presently, around 450 Bitcoins are mined daily. If all mined coins are sold, this would generate roughly $31.5 million in daily sell-side pressure, influencing market behavior.

Despite these challenges, miners generally remain stable. By holding onto mined Bitcoin instead of selling immediately, they can ease sell-side pressure, fostering a more balanced market. This approach may help stabilize Bitcoin’s price by limiting the immediate influx of new coins.

Resilience Amidst Market Fluctuations

Despite challenges, the Bitcoin network shows remarkable resilience. After the fourth halving on April 20, 2024, block rewards dropped from 6.25 BTC to 3.125 BTC, leading to a significant revenue fall. Miners saw earnings tumble from a seven-day average high of $72.4 million on halving day to between $25 and $35 million, pushing less efficient operations out of the market.

Revenue decline also reflected in Bitcoin’s hash price, hitting a record low of $0.04 in September before a slight recovery to $0.045. Hash price, indicating daily earnings from one terahash per second (TH/s) of hashing power, serves as a profitability gauge. The modest rebound suggests miners are gradually adapting, refining operations to align with the reduced rewards.

Following a seven-day average hashrate dip to 550.3 EH/s in June, the metric has steadily risen. Surviving miners, especially in the U.S., are expanding capacity, upgrading rigs, and consolidating market positions. This increase in hash power highlights the sector’s adjustment to new challenges, preparing for sustained growth and stability.