Bitcoin mining has officially become more difficult.
Traders started the week with a new algorithm to mine bitcoin — one that increased the difficulty by about +7.31%. This spike makes the crypto currency less profitable to mine, but miners are apparently not too worried. In fact, they’re used to it.
The Bitcoin algorithm regularly resets how difficult it is to mine new Bitcoin. This happens after every 2016 blocks, or more or less every two weeks.
This happens to make sure miners are adequately rewarded for solving equations that make the blockchain transactions work.
Bitcoin mining is still much more profitable than it was before the China crypto crackdown when more than half of bitcoin mining stopped. There’s much less competition.
The profitability was increased by the algorithm itself as well. As fewer miners were solving blockchain equations, the speed of transactions went down. That’s why the algorithm reduced difficulty by -27.94% in July.
The increase in difficulty is a signal that miners have settled outside China, in places like Texas and Florida.