Bitcoin: Adjusting the Next Difficulty Level May Affect Your Portfolio Because…

Bitcoin’s processing power seems to have taken a hit in recent days. At the time of going to press, it was down 0.18% in the past seven days. Also, BTC’s hash rate is down 24% since it hit an all-time high earlier this month.

However, there is a bigger concern, one that mining Bitcoin may not be as profitable as it once was.

Source: YCharts

Since recording new highs on January 13 this year, Bitcoin’s hash rate had higher highs until it finally peaked at 249 exa hash per second (EH/s) on February 15. However, a sharp drop in hash power has been observed since then. In fact, at the time of writing, the hash power was only 189 EH/s. It even fell to 169 EH/s on February 27, before registering a brief recovery.

In addition, Bitcoin mining difficulty will also increase by a amendment in less than three days on March 4. It is important to note that the mining difficulty is automatically adjusted after each 2016 block is mined. This will take about two weeks as the average time to mine each block is 10 minutes. This determines how difficult it will be to mine the next block.

Oddly enough, since November 28, 2021, the mining difficulty has successfully increased in the past six difficulty levels. In fact, it also hit a record high with 27.97 trillion hashes last week.

Source: CoinWarz

Increasing difficulty indicates that there is more competition to mine blocks. This is evident from the sharp increase in mining power since last year. This current drop in hash rate has led to estimates that the upcoming adjustment will increase the difficulty by as much as . could reduce 4.15%according to analytics tool CoinWarz.

This could provide some respite for Bitcoin miners who have seen an ongoing decline in revenue with increasing competition, computing costs and the recent price devaluation of BTC.

Bitcoin mining monthly earnings and 7DMA Income Mining statistics are in a downward spiral since the peak in October last year. This is a sign that it is becoming less profitable to operate mining rigs.

Source: The block

In addition, BTC miners that were once considered net accumulators of Bitcoin have turned into net sellers, according to Glassnode.

This contributed to the already increasing sales pressure in the market. The fact that the average mining costs are: only 16% below the average market price of Bitcoin could explain this rising trend. However, a drop in difficulty could boost mining activity and sentiment, contributing to price growth.

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