Mining bitcoin now demands more computational power than ever before, with mining difficulty reaching a new high of 17.35 trillion, up 9.89% from the previous record posted on July 1.
The new bitcoin mining difficulty (a metric that describes how challenging it is to compete for cryptocurrency rewards on the bitcoin blockchain) is a reflection of the increase in computing power dedicated to mining bitcoin in recent weeks.
Altered automatically after every 2016 blocks processed - which occurs roughly every two weeks - bitcoin mining difficulty fluctuates in line with the level of competition on the network. If competition among miners is high during the two-week period, mining bitcoin will become more computationally complex for the next 2016-block cycle, as per the network’s design.
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The new record was reached two months after the third bitcoin halving took place, which cut the reward for successfully validating a new block from 12.5 to 6.25 bitcoin - or from roughly $115,000 to $57,500 by today's rate.
By cutting the revenue brought in by mining operations in half, the landmark event was expected to weed out smaller miners, judged unable to shoulder the new cost of operation. However, the new record mining difficulty suggests investment in high-end mining equipment has only increased since the halving event.
Bitcoin is the world’s first cryptocurrency and the largest today by market capitalization, followed by Ethereum and XRP. The number of bitcoin currently in existence sits at 18 million, with the cap (the role of which is to simulate scarcity) expected to be reached at some point in the first half of next century.
When the cryptocurrency was in its infancy, mining bitcoin was relatively easy, such that an individual with a powerful computer could successfully turn a profit. In other words, the value of the cryptocurrency reward was greater than the cost of electricity expended (and any other overheads).
Today, the bitcoin mining difficulty has squeezed individual miners from the market (despite the high value of a single coin) and the scene is dominated by mining syndicates, which see participants pool computing resources in return for a portion of the group’s cryptocurrency earnings.
These bitcoin mining consortia have been known to take extensive measures to improve profit margins, including establishing bespoke agreements with power providers that guarantee cheaper energy in exchange for commitment over a predefined period.
While it is next to impossible for an individual user to turn a profit mining bitcoin today, mining syndicates provide an alternate route for dedicated enthusiasts.
However, it is important to understand that, due to the variance in mining difficulty and fluctuation in bitcoin value, participating in a mining operation is a speculative pursuit and does not guarantee an income.
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Joel Khalili is the News and Features Editor at TechRadar Pro, covering cybersecurity, data privacy, cloud, AI, blockchain, internet infrastructure, 5G, data storage and computing. He's responsible for curating our news content, as well as commissioning and producing features on the technologies that are transforming the way the world does business.