For most of 2014, miners have been faced with an unprecedented growth in the all-important difficulty setting. Six months ago, the hashing power of the entire bitcoin network was a mere 20 PH/s, meaning that a miner with a 1 TH/s rig had a fighting chance at making a decent profit in the daily game of roulette that is bitcoin mining.
Since early March, however, a flood of newer, faster, cheaper ASICs and giant cloud-based mining companies have added around 110 PH/s to the network, resulting in dramatic and painful jumps in overall difficulty.
Since the difficulty increases every 2016 blocks (generally three times a month, for the non-miners), a mining set-up can go from a somewhat profitable venture to a money-losing operation in a matter of days. This point was driven home for many miners in late June, when the difficulty spiked, growing almost 25% from 13,462,580,115 to 16,818,461,371.
Even relatively well-equipped miners were suddenly facing a situation where their equipment might cost more to power and operate than it was likely to make back from block rewards.
But there is good news: For the first time since early 2013, the next difficulty increase is expected to be in the single digits. BitcoinWisdom is expecting a mere 5.8% increase on Sunday, giving miners a much-deserved break from their constant struggle for profitability.
It might not last long, however. With many mining hardware makers on the verge of releasing next-generation, high-powered ASICs, this might simply be the calm before the storm.
Written on 09 Jul 2014.