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Mining Difficulty Expected to Increase for the First Time Since China Crackdown

Mining Difficulty Expected to Increase for the First Time Since China Crackdown

Bitcoin’s mining difficulty may be set to increase for the first time since China’s crackdown on crypto mining in May. A rapid expansion of mining facilities in North America and the return of Chinese miners through overseas hosting sites are two major factors that will drive up mining difficulty, according to industry pros.

Mining difficulty is a metric to describe how hard it is to mine a block and get rewards in bitcoin. An increase in mining difficulty requires a miner to use more computing power to earn bitcoin, which reduces the miner’s profit margin. The more mining machines are online, the higher the mining difficulty and the more secure the Bitcoin network.

Mining difficulty has seen a continuous decrease since the Chinese central government called for local authorities to shut off bitcoin mining operations across the country on May 21. The latest bi-weekly difficulty level posted on July 17 is the fourth downward adjustment since the crackdown.

Even before China’s crackdown, big North American mining companies such as Marathon and Riot were already expanding their operations due to bitcoin’s historic bull run in early 2021, Luxor CEO Nick Hansen said. Most of the growth that will drive up mining difficulty in the coming months would still be from the North American miners who planned expansion ahead of Beijing’s crackdown last year or in early 2021, Daniel Frumkin, researcher at Prague-based mining company Slush Pool, said.

Mining Difficulty Expected to Increase for the First Time Since China Crackdown, CoinDesk, Jul 28

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