Bitcoin miners brace for higher difficulty in December

Bitcoin mining difficulty has been predicted to rise by next month as the wider industry prepares for the next difficulty adjustment scheduled for December 11. Presently, hashprice, the metric that measures expected miner profitability per unit of computer power, sits at record lows.

According to a report from CoinWarz, Bitcoin’s next mining difficulty adjustment is expected to occur at block 927,369 at around 12:09:34 AM UTC, increasing the difficulty marginally from 149.30 trillion to 149.80 trillion. The latest adjustment, which occurred on Thursday, saw the difficulty drop from 152.2 trillion to 149.3 million, a move that resulted in an average block time of about 9.97 minutes, putting it slightly below the 10-minute mark.

Bitcoin mining difficulty predicted to rise next month

Despite the recent drop in Bitcoin mining difficulty, hash price is presently close to $38.3 petahashes per second (PH/s) per day. According to Hashrate Index, the figure is up from the record low of below $35 PH/s that was recorded on November 21. For context, miners need the $40 PH/s as a break-even level, which is also coincidentally the point where they have to de-energize their machines or continue their operations.

In addition, the drop in hash price has also been affecting the mining supply chain, with hardware providers filling fewer orders to struggling miners and taking a hit on any BTC-denominated sales due to the drop in price after the October market crash. Mining hardware manufacturers like Bitdeer have turned to self-mining to offset the shortfall in demand for mining machines. The high capital expenditures and the slim profit margins have seen miners rethink their operations.

As computational power and electricity needed to mine blocks continue to rise as a result of the Bitcoin halving that occurs every four years, miners are now shifting into the AI data and compute business. According to reports, companies that have made the switch have generated billions of dollars in revenue. A typical example is Cipher Mining, with the firm inking a $5.5 billion deal with tech giant Amazon to provide compute power to Amazon Web Services over the next 15 years.

Mining industry faces growing challenges

The mining industry continues to face growing challenges, including regulatory bans or restrictions, increasing energy costs, and geopolitical tensions between the United States and China that threaten to disrupt critical equipment supply chains. Last month, the Abu Dhabi Agriculture and Food Safety Authority (ADAFSA) announced a ban on using agricultural land for crypto mining. Violators of the directive are also set to face fines of up to 100,000 AED.

In addition, the United States Department of Homeland Security (DHS) has also started a probe into mining manufacturer Bitmain, which has its base in China. The agency is trying to determine whether its machines can be remotely accessed or used to commit espionage. Last year, US Senator Elizabeth Warren, one of the most vocal crypto critics, suggested that ASICs could be used for spying on the United States military bases and sensitive national defense installations.

“They’re loud, they’re hot, and they suck up a ton of electricity, which can crash the power grid,” she added. Meanwhile, Bitmain remains the leading manufacturer of ASICs used to mine proof-of-work (PoW) digital assets like Bitcoin. According to a University of Cambridge report, the company commands about 80% of the total market share. Sanctions, tariffs, or restrictions imposed on the company by the US could trigger a supply chain for the crypto mining industry, which relies heavily on Bitmain.

Get up to $30,050 in trading rewards when you join Bybit today