Bitcoin mining profit is shrinking with prices in dumps and difficulty on the rise

• Bitcoin mining difficulty is at an all-time-high of 26.64 trillion.
• This means that mining for the world’s oldest cryptocurrency is now more difficult and is using more energy than ever before in its history.
• With the price of Bitcoin in the dumps after the crypto market crash, profit margins for miners are thinning by the day.

Bitcoin’s price may have gone for a nose dive this year, but its mining difficulty just hit an all-time-high. This means that while the price of the cryptocurrency is falling, it’s not a deterrent for miners — even though it means that the profitability of Bitcoin mining is shedding, and fast.

Data collected by Blockchain.com shows that the Bitcoin network’s difficulty is currently at 26.643 trillion and likely to rise once again when the next update occurs in another 10 days, which will mark another all-time-high.

At the same time, with the price of Bitcoin in the doldrums compounded by the FUD around crypto mining, the revenue from mining for Bitcoin has taken a hit.

“Cryptocurrencies slipped again in Asian trades on Monday as investors scouted for safe haven assets such as the dollar and gold, ahead of a Federal Reserve meeting later this week,” noted CryptoWire in its January 24 recap. The Crypto Fear and Greed Index (FGI) is currently teetering in ‘extreme fear’ territory.

What is Bitcoin mining difficulty?

The difficulty of mining for Bitcoin is basically a measure of the overall computational power required to confirm transactions and discover new blocks. This saw a huge dip in 2021 when China started to crackdown on Bitcoin mining in the country.

Come 2022, with most of the miners having found new homes in countries like the US, Russia and other more crypto-friendly countries, mining seems to not only have made a comeback — but it’s more difficult than ever before to find new blocks.

Higher the difficulty, lower the profit

The more computational power that is required to mine for Bitcoin, the more expensive is the entire process. This means that even if a miner is able to crack the code, his profit margins are shrinking since they have to use more energy to get the same end result. Moreover, with Bitcoin’s prices in the dumps, the value of that block is lower.

According to data cited by bitcoin.com, even the best rigs in the market right now are making less than $10 a day. Older machines are making even less.

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