Bitcoin Mining Difficulty | New Highs Amid Shrinking Fees

Bitcoin’s mining industry is still at a tough spot, and profitability is taking another hit. The network’s mining difficulty—a measure of how hard it is to find and add new blocks—has reached new all-time highs, even as the hashrate briefly touched 1 zettahash before retreating.

Miners are facing a tough situation. Mining costs are up and fees are sitting at record lows, while competition is at an all-time high. That raises real concerns about how profitable mining still is—and what lies ahead for bitcoin mining as a whole.

In simple terms, mining difficulty tells us how much computing power is required to mine bitcoin. It adjusts every two weeks to keep block times around 10 minutes. If miners are solving blocks too fast, difficulty rises. If they’re too slow, it drops.

This adjustment mechanism was designed by Satoshi Nakamoto to keep the supply schedule predictable. If miners are solving blocks faster than the network expects, difficulty increases to bring the validation speed back to the intended rate.

For the past 5 epochs, the difficulty adjustment has been positive, with the biggest one driving difficulty up about 8%.

The latest adjustment saw difficulty rise about 5% to around 136 trillion—the highest ever.

Just before the adjustment, Bitcoin’s hashrate—the combined computing power securing the network—hit 1 zettahash per second (ZH/s), a milestone that shows the scale of modern mining.

1 ZH/s is 1,000 exahashes, an astounding number of calculations per second.

To put that in perspective, a high-end and well-known bitcoin mining rig in 2020, the Antminer S19, could guess 110 terahashes a second. To reach this hashrate, you will need about 9 million of these miners.

But the party was short-lived. After peaking, hashrate dropped to around 961 EH/s and block times stretched to over 11 minutes. This ebb and flow is part of Bitcoin’s built-in “self-correcting mechanism” that balances block production with network security.

On the surface, a high hashrate means strength: the network is harder to attack and more secure.

But the distribution of that hashrate is sparking debate. Mining pools, which allow thousands of smaller miners to combine forces, are the backbone of the industry. But they also raise concerns about centralization.

Related: Bitfinex Warns Bitcoin Halving Could Lead to Mining Centralization

As of yesterday, Foundry USA controlled 29.92% of the hashrate, AntPool 17.83% and ViaBTC 12.49%. Together, these 3 control more than 60% of the network’s hashpower.

Analyst Jacob King said on X that this concentration means a 51% attack is possible.

Others are more sanguine. Rich Rines, a Core DAO contributor, said while centralization is “a valid concern in theory,” in practice, the industry is robust.

Mining is mobile, and if one pool turned malicious, others could quickly move resources elsewhere. “All of these forces act to push back against long-term dominance by any single actor,” Rines said.

Record-high difficulty isn’t just a technical milestone—it has real-world consequences for miners.

In past bull runs, high bitcoin prices meant big profits for mining companies. But today, it’s more complicated. Even with bitcoin above $110,000, miners aren’t seeing the windfalls of 2017 or 2021.

Halved block rewards, amid rising costs and relentless competition, are the main reasons.

According to analysts, transaction fees, which used to be a source of income, have been low since 2022, and now, they have reached their lowest levels in over a decade.

That leaves block rewards as the only reliable revenue source. And miners have to constantly upgrade to the latest and greatest hardware just to stay competitive.