When a bitcoin had just hit price parity with the dollar following the Security Now netcast and the subsequent press coverage in Slashdot and elsewhere, the cost of electricity to mine a bitcoin was just under $0.08. Five weeks later, thanks to the increase in bitcoin hashing difficulty, the cost of electricity to mine a bitcoin is now just under $0.20.
Earlier today the difficulty threshold for generating bitcoins went from 55590 to 76194. The difficulty readjusts every 2,016 blocks and today this happened when block 112,896 we reached.
The hashing strength of the entire Bitcoin network is now at roughly 545 GHash/second using the new difficulty measurement. Early calculations for the next adjustment indicate a leveling off however with nearly two weeks left before that happens there’s no way to be certain it won’t jump again. It is quite possible though that we are done seeing 40% or higher increases of the difficulty.
Supply of the GPU hardware used widely for mining will likely loosen now that ATI has released their high end graphics card the Radeon HD 6990. Miners using hardware less powerful than the HD 69xx, HD 5970, or HD 5870 are responding to the jump in difficulty by switching to mining pools. There are currently five public mining pools in operation.
The cost of electricity for the graphic from above was calculated for a typical miner running equipment at home under residential utility rates in the U.S. Elsewhere in the world, electric rates vary significantly.
If the network hashing strength continues to increase yet the market exchange rate doesn’t follow, then mining will soon turn unprofitable in certains parts of the world. As a currency that knows no borders, that disparity could result in a significant loss of opportunity for some.
Written on 09 Mar 2011.