BTC Mining Difficulty Adjusts 10% Upwards, Breaks Away From Months-long Downwards Trend

Bitcoin’s (BTC) most recent mining difficulty adjustment went upwards, instead of following a downwards trend which it had been since the past few months. This, according to data from Bitcoin Wisdom and

Mining “difficulty” is a term used to refer to how easy (or difficult) it may be for cryptocurrency miners to solve complex math equations, in order to validate a block of transactions on proof-of-work (PoW)-based networks such as the Bitcoin blockchain.

Only Miners With "Access To Extremely Low Electricity Costs" Can Afford To Mine

As CryptoGlobe reported in early December 2018, a sharp and continuous decline in the BTC price would result in most miners having to mine at or below the cost of electricity, a Bloomberg study had concluded. As explained by the news media outlet, the miners’ breakeven point (a few week back) was at roughly $4,500, with the exception of a select group of miners who were able to significantly reduce their operational costs.

Miners with access to “extremely low electricity costs” and “very specific business models” would be able to carry on their mining activities while making profits, according to Bloomberg’s research and interviews with industry participants. Notably, data had shown miners leaving the Bitcoin network, which was evident from the declining hashrate and decreasing mining difficulty due to unprofitable mining.

As covered, bitcoin mining had been consolidating to fewer and fewer entities including, ViaBTC, SlushPool, AntPool, and - while unknown BTC miners accounted for only 3.8% of the flagship cryptocurrency’s hashrate (down from an all-time high of about 40%).

Five Downwards BTC Mining Difficulty Adjustments In 2018

Significantly, there had been repeated downwards adjustments since July 2018 to the bitcoin mining difficulty level as the digital currency’s price dropped and miners required lower costs to avoid losses from participating on the Bitcoin network. In total, there were five downwards adjustments last year, which is more than what was recorded in the past seven years. The first adjustment occurred in July, one in October, another in November, and two in December.

On December 3rd, the largest downwards adjustment was recorded at 15.1%, which came following reports that a large number of miners had been abandoning the BTC network due to uncertainty regarding the long-term profitability of mining the pseudonymous cryptocurrency.

Despite concerns from many members of the crypto community, Alistair Milne, the chief information officer at the Digital Currency Fund, tweeted to his followers:

Remember the Bitcoin mining death spiral FUD? Mining difficulty just adjusted +10%.

Milner also shared some notable statistics (via Twitter) regarding BTC’s hashrate:

The Monero Hard Fork – Did it Help GPU Miners?

Monero, the open-source altcoin created to provide fungibility, privacy and decentralization, successfully underwent a hard fork on 9th March, 2019, resulting in a hash rate plummet of over 80% and a purge of ASIC miners from the network. This is the latest development in Monero’s ongoing war against ASICs, which is designed to prevent too much centralisation of mining hash power. But what exactly does it mean for GPU miners?

The War with ASICs

Monero performed its first anti-ASIC hard fork in April 2018 to counter ASIC machines such as the Antminer X3. The Monero Core Team vocalized specific concerns over government manipulation or imposed regulation of the network and has consequently committed further to increasing ASIC resistance, building its strategy on making scheduled hard forks to prohibiting ASICs from engaging with the network.

In deliberately excluding ASIC mining, Monero is committed to CPU and GPU miners, and resisting centralisation. Preventing potential 51% attacks is doubly important for a privacy coin like Monero, and as mining farms grow in size and the number of hash-power-for-hire marketplaces increases, it’s important to remain committed to this path. The recent Ethereum Classic attack in January shows that it is possible to carry out a 51% attack, even on an altcoin with a fairly high market capitalization.   

The one danger is that over time, Monero’s commitment to its six-monthly hard forks may be unsustainable. This is because community consensus becomes increasingly harder to achieve – the last fork spawned four Monero spin-off projects.

 The Implication for GPU Miners

Monero’s introduction of the anti-ASIC Proof of Work protocol saw hash rates plummet by 83%, boosting profitability for GPU miners who typically mine other more profitable coins. However, the hash rate is already beginning to climb, recovering to 313.75 Mh/s from 95 Mh/s.

The drop in hash rate made Monero one of the most profitable coins to mine for a time, but through the laws of supply and demand, the hash rate is already equalizing. The market didn’t rally in response to the hard fork as one might have expected, the sluggish response may be because most mining farms and GPU mining rigs require too much manual effort to change mining algorithms – although software is becoming more sophisticated.

Monero Network Hashrate

Monero’s upgrade has also introduced further security-oriented changes to the dynamic block algorithm to help mitigate potential ‘big bang’ attacks. Sticking to its privacy coin roots, the upgrade further introduced a dummy encrypted payment ID, improving the homogeneity of each transaction.

The latest hard fork is therefore a significant improvement on Monero’s founding principles of privacy, security and decentralisation which should be welcomed. Plus, it’s a boon to GPU miners, and demonstrates that if you’re agile, there’s still money to be made through GPU mining.

Matt Hawkins, CEO at Cudo Ventures

Matt Hawkins is a distributed computing expert and entrepreneur. He founded and sold a data centre business and is now applying his knowledge, network and his enthusiasm for crypto market and technology developments in Cudo Miner. Matt believes decentralised computing is better for the environment, and Cudo’s vision is to help make computing more ethical and sustainable – whether its reducing waste or creating innovative ways to support good causes.