Bitcoin’s mining troubles just hit a record high of over 20.6 trillion as more people are mining on a larger scale than ever thanks to rising mining revenues and Bitcoin’s parabolic price recovery.
“A new difficulty that has hit an all-time high is no surprise when you consider mining revenues have tripled in recent months,” said Edward Evenson, director of business development at Braiins, a mining software company that recently opened the full Took ownership of the leading pool, Slush Pool, after having been a majority stakeholder since 2013.
The adjustment on Saturday in block 665.280 means an increase of 11% compared to the last adjustment on December 27th.
Difficulty is a relative measure of the amount of resources required to mine Bitcoin. This increases or decreases depending on the computing power used by the network, which is known as the hashrate.
As the price of Bitcoin continues to rise, hitting nearly $ 42,000 on Friday, miners’ earnings keep pace and motivate even more attendees to mine mine. Twelve months ago, Bitcoin’s difficulty level was below 15 trillion.
“I see this trend continue into the first half of 2021,” Evenson told CoinDesk.
“Show me the money”
The mining companies are signaling that even greater trouble will arise in the future and plan to capitalize on higher revenues to such an extent that leading manufacturers like Bitmain sold out on their orders for new machines by August, although the price of some models had nearly doubled .
“ASIC manufacturers had to reject more than half a billion dollars in orders for mining equipment in the fourth quarter of 2020 alone,” said Evenson. “Hardware supply chains are currently overwhelmed by immense demand.”
Companies like Core Scientific are easily contributing to the congestion with a massive 59,000 machine orders from Bitmain that are set to triple mining capacity.
Listed mining companies like Riot Blockchain (RIOT) and Marathon Patent Group (MARA) have placed similar pre-orders for 31,000 and 90,000 machines, respectively, through 2020.
With the ongoing mining frenzy, Bitcoin’s hashrate will “likely at least double in 2021,” predicts Evenson.
A big miners problem
The current ASIC shortage is more than an inconvenience, it signals deeper fundamental weakness in the mining sector in the face of rising revenues and activity.
“Right now, the greatest risk to the mining business is the ASIC shortage,” said Steve Barbour, president of portable mining infrastructure maker Upstream Data, in a direct message to CoinDesk.
Barbour said he saw “no signs” yet that manufacturers were “ramping up fast enough” to meet the undiminished rise in demand for machines. They don’t even pursue temporary solutions like offering mid-range machines to “miners not interested in high-priced, highly efficient equipment”.
With no sign of replenishment, miners scoured the secondary markets for available and working machines, causing the prices of some models to hit 12-month highs, according to previous CoinDesk reporting.
The mining company “definitely has room for diversified competition,” said Barbour.