Bitcoin Mining Soars to New Record, Profit Margins Drop as Ethereum Consolidation Releases Capacity

news7f10/23/2022

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Bitcoin Mining Surges to New Record, Profit Margins Decline as Ethereum Merge Frees Up Capacity

The amount of computing power dedicated to Bitcoin mining has grown to record levels as more companies use energy and data center space is freed up after the Ethereum network upgrade, which will likely reduce the margins. profit. Mining difficulty, a measure of the computing power of Bitcoin miners for the blockchain, increased by 13.6% in the two weeks ended Monday. This is also the largest biweekly correction since last May. The increase is partly due to a drop in Ether mining activity, analysts say.

Called Consolidation, EthereumIts technical upgrade has replaced up to a million powerful computers with Ether holders to validate network-encrypted transaction data and reduce its carbon footprint by 99%. Ether miners have to unplug their devices as they no longer receive token rewards after the Merge, leaving excess space in data centers for storage Bitcoin mining machines and more electricity to power the rigs.

Ethan Vera, operations director at electronic money-disruptive company Luxor Technologies, has provided services to both Ether and Bitcoin miners. Vera estimates that about 4% of the current computing power for Bitcoin mining has been transferred from Ether mining to Bitcoin miners in the past two weeks.

Higher levels of computing power will reduce mining revenue for Bitcoin miners, who are already battered by low Bitcoin prices and rising energy costs. The more mining power, the less Bitcoin each miner will receive as the network only awards a limited amount of token rewards after successfully processing a certain amount of data.

Mining Ether consumed about half of the energy used to mine Bitcoin before Consolidation. While small miners run graphics cards at home, industrial scale crypto miners operate tens of thousands of tokens in their premises.

“What is critically important to Bitcoin mining is access to cheap electricity,” said Matthew Kimmell, digital asset analyst at crypto asset management firm CoinShares. “If those Ethereum operations are built with cheap energy sources in the mine, then I think well-cap Bitcoin miners can see that as a scaling opportunity to buy those assets and deploy the machine. hook”.

More resources from Ether miners is just one of the reasons why Bitcoin mining power has skyrocketed.

Joe Burnett, chief analyst at Blockware Solutions, said: “While the cost of electricity has dropped month-to-month, it could rise again when people turn on their heaters in the winter, Vera said.

While Bitcoin miners can exploit the data center space and energy infrastructure of Ether miners, they cannot use graphics cards. Instead, they operate specialized computers with a unique algorithm for Bitcoin mining.

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