Bitcoin mining difficulty, which measures the challenge of adding new blocks to the blockchain, reached a record 142.3 trillion on Friday.
This surge follows consecutive all-time highs in August and September, fueled by the deployment of massive new computational power in recent weeks.
Simultaneously, Bitcoin’s network hashrate, reflecting total mining power securing the network, hit over 1.1 trillion hashes per second, according to CryptoQuant data.
As mining difficulty climbs, it demands more energy‑intensive and specialized hardware, pressuring smaller miners and even publicly traded companies.
This trend sparks fears of increased mining centralization, as only entities with access to low‑cost power and efficient infrastructure can sustain mining operations.
Centralization Pressures on Public Mining Firms
Governments and energy providers with access to free or surplus energy are intensifying competition in Bitcoin mining. For example, countries like Bhutan, Pakistan, and El Salvador are tapping excess energy to mine Bitcoin.
Pakistan recently announced plans to allocate 2,000 megawatts of surplus energy to Bitcoin mining as part of its expanding cryptocurrency regulations.
In Texas, energy firms collaborate with ERCOT to integrate Bitcoin mining into grid management, using miners as controllable loads to balance supply and demand.
This strategy allows energy providers to profit by consuming excess power during low demand and reducing usage when demand peaks, giving them a competitive edge over public miners who must pay for energy.
Overall, rising difficulty and energy demands may cause smaller mining operations to exit the market, potentially increasing mining centralization and impacting Bitcoin’s decentralization ethos.