Bitcoin mining is getting harder and harder, and that’s great news
Mining difficulty, a unit of measurement used during the mining process to estimate the power and time required to hash each block, reached a record high on October 23rd. The number of 36.835 trillion hashes needed to participate in the security of the blockchain has been reached. At the time of writing this article, November 7, 2022, the level is slightly lower, but still very high, at about 36,762 hashes.
If that doesn’t speak to you, here’s a little reminder of what mining difficulty actually is. It is a unit of measure used to rate the difficulty of cryptographic puzzles that allow new units to be extracted when they are solved. According to a rule set by Bitcoin creator Satoshi Nakamoto in 2009, every two weeks this difficulty increases or decreases depending on the number of miners in the network; its purpose is to maintain the stability of cryptocurrency mining speed. Thus, the difficulty of calculations adapts to the available power (“hashrate” or “hash rate” of the network): if blocks are created “too quickly”, the difficulty increases “to protect the target block”. time” (the time it takes to create a block) 10 minutes.
Distressed miners, however, are still the majority
As BitPanda Academy explains, “The more popular a cryptocurrency like Bitcoin is, the greater the number of computers participating in a peer-to-peer network. (combining efforts and hash rates), competing for limited block rewards increases with the number of participants and computing power involved. to the hash power of the entire network.” To compete with their peers, miners today must acquire increasingly powerful Asics (“application specific integrated circuit”) machines, which contain chips specifically programmed for cryptocurrency mining.
As a result, mining difficulty reflects the degree of competition between miners to find new blocks and obtain rewards. However, the greater this degree of competition, the more secure the blockchain. Admittedly, this is not good news for miners because, as BeInCrypto notes, “mining is no longer profitable amid rising energy prices and inflation.” For them, the increased competition also means that they have to sell more bitcoins (currently at €20,798 and stagnant around this level for 5 months) than they actually earn to compensate for their reduced earnings. Profits tripled in one year: According to Arcane Research, operating the network currently brings miners $17.9 million per day, compared to $62 million during the bubble in November 2021. “minor players” in mining to separate their machines. Some mining companies such as Bitfarms, Riot Blockchain, and Argo Blockchain have seen their shares drop by 80-90% since January 2022.
More challenges mean a more secure network
But the advancement of “hashrate” and the difficulty of mining also means that despite the collapse of cryptocurrencies in June 2022 (the famous “crypto bear market”), most miners are holding on and becoming more and more. To ensure the security of the Bitcoin network. Indeed, it should be noted that the opposite situation, i.e. the reduction of computing power (hashrate) needed to reduce the number of miners, will adversely affect the security of the blockchain until it becomes vulnerable to attack.
“The value of the hash rate tells us how secure the cryptocurrency mining network is. The rule is simple: the higher the hash rate, the more secure the network,” can we read in the “online course” from Bit2Me Academy? . Indeed, the power needed to carry out a “51% attack” (an attack that involves altering the history of the blockchain and is only possible if the breaching hacker(s) can capture 51% of it). total mining computing power) increases with increasing hash rate. “Since only hundreds of thousands of miners can reach this level of 51%, the chances of a malicious organization being able to carry out this attack in isolation are greatly reduced. Therefore, many experts pay special attention to the global hash rate of a cryptocurrency. Know whether it is safe or not,” – Bit2Me concludes.