Bitcoin Mining Difficulty Drops for Second Time in March

Linh Nguyen — Fri, 18 Mar 2022 10:22:37 +0000

@ Crypto Insider

The decrease is likely a result of miners unplugging their machines due to high energy costs, said Compass Mining CEO Whitt Gibbs.

The difficulty of mining a bitcoin block dropped 0.35% on Thursday, the second time this month, after a consistent climb since November.

On March 3, mining difficulty dropped 1.5%, data from information platform Glassnode shows.

The difficulty adjusts automatically relative to the computing power on the network, also known as the hashrate, to keep the time between each mined block relatively stable at 10 minutes.

The bitcoin mining hashrate has dropped from an all-time high in February of 248 exahash/second (EH/s) to 216 EH/s on March 17, according to data from Glassnode.

“This slight drop is likely due to unprofitable miners unplugging ASICs (application-specific integrated circuits). As energy prices increase globally, we will likely see more ASICs fall off the network,” Compass Mining founder and CEO Whitt Gibbs told CoinDesk in a Telegram message on Friday.

Electricity prices are soaring across the world as one of the world’s largest exporters of fossil fuels, Russia, is enthralled in a war with Ukraine, and global energy supply chains are being severed by sanctions.

“My bet is that Kazakh miners going offline due to electricity shortages and a government crackdown on illegal mining caused the drop,” Jaran Mellerud, researcher at Oslo-based Arcane Research, told CoinDesk.

On March 15, Kazakh authorities said they seized almost $200 million of equipment from crypto mining operations as they crack down on illicit mines. Legally operating miners in Kazakhstan had their power cut off at the end of January, as the government struggled with energy shortages.

“Using HashrateIndex’s prices per TH (terahash, a measurement of the hashrate, the computing power on the bitcoin mining network) for rigs with medium efficiency, the Kazakh government should have seized around 3 TH/s worth of mining rigs, equivalent to 1.5% of Bitcoin’s hashrate,” Mellerud said.

Despite the fact that North American miners continue to plug in new machines, “the withdrawal of capacity from Kazakhstan is currently limiting bitcoin’s hashrate growth,” he said.

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Morgan Stanley Says Bitcoin Cannot Escape Energy Requirements

Linh Nguyen — Wed, 23 Feb 2022 14:42:56 +0000

@ Crypto Insider

Increased investor interest means that sustainability has become an important consideration for crypto, the bank said.

Mining for cryptocurrencies can be highly energy intensive with bitcoin mining alone requiring the same amount of electricity as the Netherlands’ annual total power generation or 0.5% of total global electricity consumption, Morgan Stanley said in a report entitled “ESG Considerations.”

Environmental, social and governance (ESG) criteria are standards for a company’s operations that some investors use to screen potential investments.

The bank notes that publicly listed bitcoin mining companies have begun to promote sustainability goals and many buy carbon credits to offset their impact or aim to use cleaner forms of energy.

Bitcoin and ether approve transactions in a highly energy intensive way, known as proof of work (PoW). Proof of stake (PoS) is a more energy efficient alternative to PoW, which could reduce the climate impact, the bank said.

Ethereum hopes to move to PoS by late 2022, and while it requires much less energy than PoW, it brings its own challenges with risks of centralisation, analysts led by Sheena Shah wrote on Tuesday.

Morgan Stanley also sees a continued risk of governments restricting energy use for crypto mining, noting that as energy costs have risen, countries such as China and Kosova have banned mining, while others have restricted the activity.

With respect to social considerations, cryptocurrencies are often viewed as a “means of supporting financial inclusion due to relatively low costs, low barriers to entry relative to the traditional banking system and relatively fast transaction times for cross border payments,” the bank said.

But there is still the need for internet access, inherent volatility in fees and the cryptocurrencies themselves, and crypto doesn’t solve the key issue of unbanked individuals having insufficient money, it added.

Governance of crypto applications will be an important topic, the report said, as it is becoming apparent that they are not as decentralized as first promised.

New regulations will likely change the rules of investing in crypto-related products, but are unlikely to change the “core of how the underlying crypto is run,” the bank noted, adding that a new type of governance approach has emerged called a DAO or decentralized autonomous organization.

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crypto mining Archives - Crypto Insider

Bitcoin Mining Difficulty Drops for Second Time in March

The decrease is likely a result of miners unplugging their machines due to high energy costs, said Compass Mining CEO Whitt Gibbs.

Morgan Stanley Says Bitcoin Cannot Escape Energy Requirements

Increased investor interest means that sustainability has become an important consideration for crypto, the bank said.