Bitcoin mining operations are on the path to full recovery following the most dramatic short-term disruption in network history earlier this year, and miners are reaping the rewards in revenues.
In its Monday “Week On-chain” report, on-chain analytics provider Glassnode reports that Bitcoin’s hash rate has largely recovered despite 50% of the network’s hashing power going 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 the hash rate and mining difficulty — which measures competition among miners seeking to solve the network’s next block — are both on a “consistent path to recovery.” Cointelegraph reported that difficulty slumped by 28% in early July.
Having increased 39% since late July, mining difficulty has nearly returned to its pre-China exodus levels, with an additional upward adjustment expected to take place this week. Glassnode also reported that the difficulty ribbon has posted its strongest reversal since December 2018.
As observed by Chinese media outlet Wu Blockchain, Bitcoin’s difficulty increased by 4.71% at block height 703,584 on Tuesday. It is the sixth consecutive increase since July 31.
Despite block rewards having been slashed by 50% from 12.5 Bitcoin (BTC) to 6.25 BTC in May 2020 halving event, mining profitability has increased significantly since.
Glassnode noted that the current mining profitability of $40 million daily is up 275% since before Bitcoin’s May 2020 halving and has increased by roughly 630% compared to June 2020’s lows of roughly between $6 million and $8 million.
“Despite dramatic shifts in the mining market, multiple deep price corrections, and a halving event in May 2020, the Bitcoin block reward value continues to rise, creating incentives for the market to adapt, innovate and recover,” the report added.