Ethereum and Bitcoin Mining Difficulty
Bitcoin
Bitcoins mining difficulty is expected to jump over 6% on Wednesday’s difficulty adjustment. Mining difficulty is a measurement used to indicate how difficult it is to solve the cryptographic puzzle to mine a block. The difficulty is adjusted according to the number of miners. The more miners there are on the network, the more difficult it will be to mine a block.
At the start of the year in January 2022, the mining difficulty spiked 9.3%. The decline in Bitcoin’s mining difficulty was likely a result of the heat and power situation in Texas. Many of the largest Bitcoin mining companies have huge operations in the state and have been forced or incentivized to shut down their operations to allow more power to the grid to supply homes with heat or cooling. In February, energy issues arose as temperatures were getting very low. Miners voluntarily shut down or paused operations in Texas to allow residents to receive power for heat.
Riot Blockchain is operating North America’s largest Bitcoin mining facility in Whinstone, Texas. The company voluntarily curtailed energy consumption in June and July. They reported that they mined 28% less BTC in July 2022 than they did in July 2021. This generated Riot Blockchain around $10 million in power credits.
Ethereum
Ethereum is expected to undergo The Merge in September. This will mark the switch from proof-of-work to proof-of-stake. Upon a successful update, the network is expected to undergo a triple halving event.
Halvings are when the reward for mining is cut in half, usually scheduled through milestones such as block numbers. The Merge is expected to reduce the ETH supply by up to 90% through burning and generating deflationary pressure on the network.
