Challenges in Bitcoin Mining: Rising Difficulty and Low Hash Prices

The Bitcoin mining difficulty is scheduled to increase on December 11, 2023, with the adjustment expected to occur at block 927,360 around 12:09:34 AM UTC. This increase will raise the difficulty from 149.30 trillion to 149.80 trillion, as reported by CoinWarz.

Recently, on Thursday, the mining difficulty was reduced from 152.2 trillion to 149.3 trillion, which resulted in an average block time of approximately 9.97 minutes, slightly below the targeted 10 minutes.

Despite this recent decrease in difficulty, the hashprice, which measures miner profitability per unit of computing power, is currently around $38.3 per petahash per second per day, according to Hashrate Index.

This figure is above the record low of below $35 per petahash per second reached on November 21, but still well below the critical break-even level of $40 per petahash per second. Miners are now faced with tough decisions regarding the viability of their operations, as they may need to consider de-energizing their machines due to these financial pressures.

The mining sector is experiencing numerous challenges, including regulatory scrutiny, rising energy costs, and geopolitical tensions, particularly between the United States and China. For instance, the United States Department of Homeland Security is currently investigating Bitmain, a major manufacturer of mining hardware based in China, to assess whether its machines could be exploited for espionage.

US Senator Elizabeth Warren has raised concerns regarding the potential use of application-specific integrated circuits, or ASICs, in spying on sensitive military sites. Bitmain holds a dominant position in the market, controlling approximately 80% of the ASIC market share according to the University of Cambridge.

Possible sanctions or restrictions on Bitmain from US authorities could exacerbate existing supply chain issues for the mining industry, which heavily relies on its hardware. These developments highlight the precarious state of Bitcoin mining as it navigates through rising operational challenges and fluctuating market conditions.