The already fiercely competitive bitcoin mining industry just became 10% more intense. The latest bitcoin mining difficulty reports indicate that the network hashrate jumped from around 64.5 EH/s on July 23 to a staggering 71.5 EH/s on August 5. According to one estimate, this 10% increase represents the equivalent of 100,000 new, top-tier BTC miners going online at the same time.
Every 2,016 blocks — roughly two weeks — the bitcoin network changes the “difficulty” of finding the mathematical solution required to “mine” the next block on the blockchain. While large jumps in difficulty have happened before, the network’s hashrate has been growing at an exceptional rate for months, with the previous difficulty representing an all-time-high for the metric. The 10% increase, while not unprecedented, suggests that several major players in the cryptocurrency mining world are once again placing their full attention on mining bitcoin.
The most likely explanation for the increase in mining power in bitcoin’s network is a reprioritization of BTC mining at major mining facilities. Bitcoin’s price has been on the rise in recent months, incentivizing miners to focus all of their available hardware on the more-profitable token. With price action for most other SHA-256 mineable tokens relatively flat, bitcoin may simply be seeing a greater share of the overall cryptocurrency hashing power than it typically does.
Another possible explanation for this spike in mining activity is the rise of new competition in the cryptocurrency mining hardware market. The space has been dominated by Bitmain (makers of the AntMiner hardware) for years, but in recent months the brand has been challenged by new products from competitors like BitFury, MicroBT, Caanan, InnoSilicon, and Ebang. The increased hashrate can also been seen as a kind of proxy fight for market share between established mining ASIC chipmaker TSMC and cryptocurrency newcomer Samsung. The 10% increase could suggest delivery of new mining hardware to major bitcoin mining facilities by these firms.
If true, this would be bad news for small-scale home-based mining operations. Both Samsung and TSMC chips, and their related mining hardware, are currently backordered for individual purchases until Q4 of 2019. This would mean that the major players in the crypto mining space have a three-month headstart over individual miners. Cloud-based mining, however, should be largely unaffected thanks to that niche’s ability to scale with consumer demand.