Bitcoin Miners Face Pressure From Bear Market and Rising Difficulty

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Bitcoin miners are getting squeezed by soaring mining difficulty and minimal upward movement in the price of Bitcoin.

As of Oct. 10, 2022, Bitcoin mining difficulty rose 13.55% since May 13, 2021, to hit 35.61T, accompanied by only a 2.6% increase in the price of BTC in the last 14 days.

Difficulty is adjusted roughly every two weeks to maintain the 10-minute window in which BTC transaction blocks are solved.

A difficulty increase is partially caused by the rise in computing power, or hashrate, on the Bitcoin network. According to crypto reporter Colin Wu, the increase in hashrate could result from previous Ethereum miners migrating to the Bitcoin network after the recent Ethereum Merge. The Merge saw Ethereum become a proof-of-stake blockchain that relies on validators rather than miners to validate transactions.

Mining is the process of solving a cryptographic problem to verify transactions on the Bitcoin network. This objective is usually achieved by using special-purpose mining computers called ASICs. One miner solves the cryptographic problem, known as a hash, to add a new block of transactions to the network, and others on the network verify the solution. Miners are rewarded in BTC-denominated transaction fees and block subsidies for solving the cryptographic problem. Hence mining revenues are directly tied to the bitcoin price. 

The reward is currently 6.25 BTC for each successfully-mined block. According to, bitcoin mining revenues touched $19 billion at press time, with the Bitcoin price hovering around $19,300. 

In the short-term, bitcoin miners could be in for a rough ride. According to a researcher from The Tie, a company that measures, amongst other things, investor sentiment, said that its short-term bitcoin sentiment indicator hit a low of 44.2 on Sep. 25, 2022, while its longer-term indicator reached a 3-month high.

“Short-term sentiment can be thought of as more of [a] measure of how people are feeling about this week vs. last; a way to measure short-term changes in sentiment momentum. Long-term sentiment is more of a measure of how people are feeling this quarter relative to the prior two. It’s more of a long-tail way to measure sentiment changes in the market.” said Jack Melnick of Tie.

Bitcoin mining consumes large amounts of electricity, and securing affordable power plays a significant role in the future of many institutional miners. Many large institutional miners that do not have fixed-price contracts with electricity providers have had to slash forecasts of projected hashrate growth.

Argo Blockchain, for example, recently slashed its projected hashrate growth from 5.5 exahashes per second (EH/s) to 4.1 EH/s. Bitfarms reduced its forecast from 8.0 EH/s to 6.0 EH/s, while Canadian mining company HUT8 cut its end-of-year forecast from 6.0 EH/s to EH/s.

Other mining companies like Cleanspark and Iris Energy have chosen instead to swim upstream. Cleanspark has added 2.9 EH/s to its computing power since Nov. 2021, while Iris Energy added over 3.0 EH/s. 

Many mining companies, including Iris Energy and Rhodium Enterprises, have funded their expansions through funding from traditional capital markets. On Sep. 23, 2022, Iris Energy sold $100 million of equity over the next two years to B. Riley, an investment bank, while Rhodium recently announced that it would raise public funds through a reverse merger.

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