With BTC’s value nearing its all-time high of $73,700 a few days ago, Bitcoiners seemed poised to see a new price high for their favorite crypto asset.
Even Bitcoin miners are not left out in the anticipation. A CryptoQuant report confirms that the network’s mining difficulty and hash rate have unlocked new heights. This record shows that more mining machines have joined the bandwagon, sparking competition in the ecosystem.
Bitcoin Mining Competition on the Rise
Bitcoin adopts a proof-of-work (PoW) consensus mechanism tied to mining activities to add transactions to the blockchain. The mining difficulty and hash rate are vital in ensuring the network’s stability while new BTC is produced.
When more miners commence Bitcoin mining operations or existing facilities boost their mining capacity, the network’s mining difficulty and hash rate increase. Conversely, a reduction in mining machines brings a decrease in mining difficulty and hash rate.
Highlighting how the latest surge in the two metrics will impact mining operations, the CryptoQuant report stated:
As the difficulty increases, greater computational power is required to process transactions, driving up mining costs. With Bitcoin’s value on the rise, mining competition has intensified, posing challenges for the industry.
This shows that Bitcoin miners will struggle to contend with bigger market players unless they raise cash to boost their mining capacity. The ongoing competition within the mining ecosystem may partly explain miners’ BTC accumulation and holding policy, a practice some believe will drive the asset’s price to higher heights.
How Bitcoin Miners Are Fairing
With the latest surge in competition in the Bitcoin mining business, several miners have explored acquisitions and several strategies to stay afloat.
Last month, Bitcoin miner TeraWulf sold a 25% stake in a joint venture, raising $92 million to boost its mining operations. In other news, Bitcoin miner BitFuFu acquired a rival mining facility based in Ethiopia, helping to boost the firm’s mining capacity by 80 MW.
Another Bitcoin mining firm, Northern Data, disclosed its plan to shut down its mining business to focus on artificial intelligence (AI).
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