Ethereum Mining Difficulty Hits 8-Month High Despite Profitability Dip

BlocDesk Ethereum Mining Proof-of-Work

Keeping close tabs on the mining aspect of any cryptocurrency can yield interesting insights. For Ethereum, the mining difficulty has hit an eight-month high all of a sudden. As of late, its network hashrate has been rising, which is somewhat surprising. 

The Ethereum Mining Situation

In an ideal world, miners will only bring extra hardware online if it is profitable to do so, The profitability of any crypto network changes on a nearly daily basis. For Ethereum, there has been a very steep dropoff in profitability in recent weeks. Following the high of $0.065 per Mhash per day, things have decreased significantly. Although it remains profitable to mine ETH for most people, this can trigger a decrease in overall mining hashrate.

BlocDesk Ethereum Mining Profitability
Source: BitInfoCharts

At the same time, a lot of crypto miners will squeeze out every dime. Ethereum is on the cusp of switching to proof-of-stake in the near future. Once that happens, mining will become obsolete. Those who invested in GPUs to mine Ethereum may want to keep them running until the last second. That is, assuming their electricity costs are not too steep. Offsetting the profits generated by mining by paying bills is far from ideal. 


Hashrate Keeps Climbing

One interesting trend happening in recent months is the increase in Ethereum mining hashrate. Overcoming that dip to 150 terahash was brutal, but things are improving steadily. Today, the hashrate has surpassed 215 terahash/second once again. Very interesting, considering how the mining profitability has dipped significantly in recent weeks. 

BlocDesk Ethereum Hashpower
Source: BitInfoCharts

Even so, it appears that most miners aren’t too bothered by that aspect. As long as there is profit to be made, it is worth exploring the option. A rise in mining power often yields an increase in mining difficulty as well. This is one of the reasons why the difficulty has now hit an eight-month high.

Increasing the Difficulty

Some people will argue that a higher mining difficulty is a sign of network health. More people mining means more interest in the project and a higher grade of overall security. Ethereum seems to be in a good place, in that regard. Following the influx of extra hashpower, its mining difficulty has shot up in relatively quick succession to reach an eight-month high.

BlocDesk Ethereum Mining Difficulty
Source: Glassnode Studios

The big question is how this situation will evolve. A rising difficulty often means putting more hashpower to work to keep up. As the profitability is still on the decline, it remains to be seen if this cycle can be sustained much longer.