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A recent bitcoin-mining-difficulty-hits-record-with-pressure-mounting-on-profit-margins” target=”_blank” rel=”nofollow”>report Bloomberg highlights that bitcoin mining difficulty has risen to a record level, reflecting growing competition among cryptocurrency miners.
On Wednesday, mining difficulty increased by 3.5%, cryptocurrency mining tracker CoinWarz reported. This metric, which has been steadily increasing, typically coincides with market expectations about bitcoin price movements.
Post-halving challenges
Following the April halving, which halved miners' potential income, the price of bitcoin fell by approximately 10% to a current trading price of $57,000.
According to the report, this reduction has significantly pressured the profit margins of many mining companiesparticularly those that operate with higher costs. Christopher Bendiksen, director of bitcoin research at CoinShares, noted:
The effect of the all-time high in difficulty, just after the Halving, is making the outlook extremely challenging for many miners, especially those at the higher end of the cost curve. The researcher added that if current trends persist, some miners could struggle to maintain positive cash flow, let alone achieve profitability.
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Miners play a crucial role in the bitcoin ecosystem by using specialized computers to validate transaction data on the network. Blockchainthus securing the network. In return for their efforts, they earn rewards in bitcoin.
The financial outlook for miners has been tough this year, however; shares of major publicly traded mining companies have plummeted, with Marathon Digital Inc. and Riot Platforms Inc. seeing declines of 31% and 54%, respectively.
In contrast, bitcoin's price has shown consistency despite current challenges, rising 38% to a record high of $73,798 in March, fueled by optimism surrounding US demand. exchange-traded funds (ETFs) that hold btc.
Additionally, bitcoin's hash rate (the total computing power supporting the network) hit an all-time high in September, indicating strong participation in mining activities.
Crucial months ahead for the bitcoin market
Historically, the price of bitcoin has often dropped after its Halving event, only to recover several months later, eventually reaching new all-time highs. Many industry participants are anticipating a possible meeting In the fourth quarter, Bobby Zagotta, CEO of cryptocurrency exchange Bitstamp USA, expressed optimism about market movements.
However, Bendiksen warned that many miners appear to be counting on a significant increase in the price of bitcoin. “If that doesn’t materialize, there will be problems for some operators,” he warned.
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The next few months will be crucial in determining the sustainability of mining operations and the overall health of the market, with expectations of further growth. price recoveries rising in the latter part of the year, with other potential catalysts including easing macroeconomic conditions and the outcome of the US elections.
So far, the largest cryptocurrency on the market is down a slight 0.4% over the 24-hour period and nearly 2% over the past seven days, showing btc's struggle to regain previously lost levels.
Featured image of DALL-E, chart from TradingView.com
