Bitcoin Mining Difficulty Hits New Peak as Industry Confronts Rising Costs and Competition
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Bitcoin Mining Faces Rising Costs as Hashprice Boosts Provide Only Temporary Relief
The mining difficulty of Bitcoin has hit a new peak of 109.78 trillion, climbing 1.16% in the latest adjustment, marking a 24% increase over the past 90 days and a 52% rise during the last three months of the year. This sudden surge in mining difficulty, coupled with Bitcoin’s hash rate crossing the 800 EH/s threshold for the first time, is a testament to the network’s robust performance.
However, despite these positive indicators, miners are facing severe challenges due to the halved block rewards and increased difficulty, which have significantly squeezed their profitability. The recent rise in hashprice has brought temporary relief, but industry experts warn that this short-lived boost will not be sustainable in the long run.
According to CoinShares’ Q3 Bitcoin Mining Report, rising costs and competition for resources are expected to drive up operational expenses. Hyperscalers, which offer more lucrative alternatives, have been outbidding miners, leading to increased capital expenditures and depreciation expenses.
In response to these pressures, miners are exploring innovative strategies to stay afloat. Some are adopting artificial intelligence (AI) partnerships that may temporarily slow down BTC production but open up new revenue streams. Companies like TeraWulf and Cipher, which have strategic relationships with energy companies and significant investments in clean energy, are well-positioned to capitalize on AI opportunities.
However, the financial implications of these ventures may take time to materialize, the report stated. Meanwhile, debt markets remain liquid, encouraging miners to issue new debt even as rising interest expenses and risks of insolvency loom large. Publicly-listed miners like Argo face heightened risks if Bitcoin prices were to decline significantly.
In a surprising twist, the average cash cost of mining Bitcoin skyrocketed to nearly $55,950 in Q3, representing a 13% increase from the previous quarter. This unprecedented rise in costs has led to a total expense of approximately $106,000 per Bitcoin mined.
Source: cryptopotato.com
