Bitcoin mining is on track for a full recovery after the most dramatic short-term turmoil in the network’s history earlier this year, and miners are reaping the rewards.
On October 4 A week in the series In the report, on-chain analytics provider Glassnode reported that Bitcoin hashtags have largely recovered even though 50% of the network’s hash capacity went offline in May following China’s crackdown on the sector. The hash rate measures the total computational resources of a Proof of Work network.
Glassnode asserts that both hash rate and mining difficulty – which measures competition between miners seeking to solve the next block of the network – are both on a “steady path to recovery”. Cointelegraph reported that the difficulty fell by 28% in early July.
After rising 39% since late July, mining difficulty is almost back at pre-exit levels from China, with a further upward adjustment expected this week.
Glassnode also reported that the difficulty bar recorded its strongest reversal since December 2018.
Related: Bitcoin mining difficulty has risen 31% since July
Although the block reward was reduced by 50% from 12.5 BTC to 6.25 BTC in the May 2020 event, the profitability of mining has increased significantly since then.
Glassnode notes that current mining profitability of $40 million has increased by 275% since the pre-Bitcoin halving in May 2020, and is up nearly 630% compared to its June 2020 lows of between $6 million and $8 million.
“Despite massive shifts in the mining market, multiple deep price corrections, and the halving in May 2020, the value of the bitcoin block reward continues to rise, creating incentives for the market to adapt, innovate, and recover,” the report added.