The BTC blockchain posted its most significant mining difficulty increase in over two years. Data from blockchain monitoring resource BTC.com showed the BTC difficulty adjustment increased by 14.95% on June 17. This surge has some online proponents proclaiming that the development is a sign that BTC’s enthusiasm is on the rise.
Upon further inspection, the change is genuinely just an indicator that block reward miners have learned how to manipulate the blockchain network to abuse the BTC market.
The reduction in the block subsidy rewards had forced miners with old hardware and or costly electricity rate to pause operations, reducing BTC’s total hash rate. This departure led to two consecutive declines in mining difficulty, on May 20 and June 4, which preceded this most recent increase.
Once the operating cost to discover a block decreased, block reward miners who shut down less efficient hardware piled back in again reactivating those rigs.
Soon after the May 20 adjustment, BTC’s total hash rate quickly started rising, according to Blockchain.com. Block reward miners realized they could earn a brief profit over a limited period from low-efficiency rigs before the rapid influx of hash rate causes BTC difficulty to spike up.
Their last gasp strategy for earning revenue will most likely continue as block reward miners squeeze the last bits of profit out of older ASIC miners before they permanently turn them off. I expect that in the upcoming months, we will see further fluctuations, especially considering that China’s rainy season offers the lowest yearly electricity rates to their locally based miners.
This desperate attempt at forestalling their closure will eat into the projected revenue of larger infrastructure operators. Most E.U. or North American-based publicly traded block reward mining firms expect to earn a bigger slice of the BTC reward subsidy pie once smaller operators go out of business. So far, that bigger slice only is available when block discovery is at its most challenging.
Few businesses fail because of a single factor. BTC block reward miners already have severe underlying problems stemming from a lack of utility and adoption. This kind of added stress coming from the environment in the aftermath of the halving could put the final nail in the coffin for many in the block reward mining sector.
Which side will be the first to fold remains unknown. Block reward mining is a dead-end business model. Yet, many of those involved can still earn revenue in the interim by gaming the DAA of BTC. Even mature and well-funded block reward mining organizations lack the vision to find a sustainable way forward before the BTC network implodes.
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