Bitcoin’s Rising Difficulty Squeezes Miner Profitability

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Bitcoin’s latest difficulty adjustment came in at 9.26% earlier today, its second largest increase this year behind 9.32% back in January. As per usual, the increase is a result of a surge in hash rate over the last two weeks driving faster block production times. Now both hash rate and difficulty sit just below all-time high values. Hash rate is up 10.27% over the last 30 days.

Arcane Research that showed major public miners’ baseline bitcoin production cost (based solely on electricity prices) were around $6,000 to $10,000. You can read more on that research by clicking the above link or reading “Bitcoin Hash Rate Plummets 17% From All-Time High.” Although we haven’t performed this analysis ourselves or triangulated the data, there’s one estimate that points to an “all-in” bitcoin production cost across public miners to be closer to $27,600 in Q2 of this year. This cost would include general expenses, maintenance, payroll, interest expenses on outstanding loans and other costs outside of electricity.

Even assuming that estimate could be heavily overstated because we don’t have insight into the quality or methodology of the analysis, a bitcoin price hovering around $20,000 still puts major public miners on the ropes to achieve profitability on each bitcoin mined. 

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