Soaring Bitcoin hash rate and mining difficulty coupled with sinking fees: a report from BlocksBridge
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The Bitcoin mining difficulty has recently hit an all-time high of 129 trillion, making it more computationally demanding and costly for miners to find valid blocks. However, this challenging environment has not dampened miner revenues, which have experienced a significant surge—over 105% year-over-year, reaching a post-halving record of about $52.63 million per exahash per day.
This increase in miner revenues can be attributed to a combination of factors, including rising Bitcoin prices (up 75% over 12 months) and more efficient mining hardware. The higher difficulty adjusts roughly every two weeks to keep the Bitcoin block time around 10 minutes, scaling with total network hashrate. Despite the increased operational costs, the amplified Bitcoin price growth and technological efficiency gains have offset these expenses recently.
From an economic perspective, the high difficulty supports the view of Bitcoin as a scarce digital asset. Its stock-to-flow ratio, currently estimated around 120—double that of gold—is maintained by difficulty adjustments that regulate issuance rate, ensuring Bitcoin cannot be mined too quickly or diluted, unlike traditional commodities.
In the realm of tariff implications, while specific mining-related tariffs are not discussed, the increased operational costs from tariffs or electricity prices would exacerbate the impact of difficulty. This could influence miner profitability and location choices, potentially pushing miners toward lower-tariff jurisdictions or encouraging investment in cheaper renewable energy.
The high difficulty may also impact miner operations in regions with higher electricity tariffs or import tariffs on mining equipment, such as South Korea, which shows a local Bitcoin price premium, indicating strong domestic demand possibly impacted by regional regulatory or cost structures.
On the regulatory front, the U.S. Customs and Border Protection (CBP) has sent invoices to Iris Energy and CleanSpark for tariffs on mining rigs imported in 2024, with potential liabilities reaching millions of dollars for both companies. This development comes amidst ongoing disputes and tariffs implemented by U.S. President Donald Trump on imports from countries that sell Bitcoin mining rigs.
In summary, the evolving miner ecosystem is shaped by a complex interplay of technology, market price, and regional cost factors, which jointly determine profitability amid rising network difficulty. As the Bitcoin mining landscape continues to evolve, it will be interesting to observe how miners adapt to these challenges and opportunities.
For more insights on the impact of the high difficulty on Bitcoin mining, you can read Nishant Sharma's latest newsletter from BlocksBridge Consulting. Meanwhile, companies like Iris Energy and CleanSpark are challenging CBP's claims, and the difficulty is set to lower by 0.33% on Friday, August 22.
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