Bitcoin mining difficulty climbed 3.6% on Sept. 11 to reach an all-time high of 92.67 trillion, according to

CryptoQuant showed that the increase comes as miner profitability continues declining, further putting pressure on the firms struggling since April’s halving event.

Bitcoin mining difficulty

Bitcoin’s mining difficulty adjusts every two weeks after the completion of 2,016 blocks, designed to ensure stable block discovery times.

When the difficulty rises, miners need more computational power to mine each block. This increase typically indicates more miners joining the network, raising the overall workload. A higher difficulty also strengthens the blockchain, increasing the energy required for network attacks.

Alongside this, Bitcoin’s hash rate is climbing steadily, averaging 693 exahashes per second (EH/s) based on a seven-day moving average.

The hash rate measures miners’ computational power to process transactions and mine BTC. It shows how many calculations mining equipment performs per second to solve the mathematical problems necessary to validate transactions and add new blocks to the blockchain.

Hashprice decline

Meanwhile, Bitcoin’s hashprice, a measure of miner revenue, fell to a record low of less than $40 per petahash, according to Hashrate Index data.

Hashprice estimates how much miners earn based on the computational power used for mining.

Digital Mining Solutions founder Nico Smid stated:

“Hashprice tried rebounding but was pushed back down to its historic lows by the difficulty adjustment.”

Meanwhile, the continued decline may spell disaster for many mining operations, especially those already operating at a loss since the April halving, which reduced their rewards to 3.125 BTC from 6.25 BTC.

This has led to some miners diversifying their operations to include providing services for AI companies. However, Luxor Technology noted that Fractal Bitcoin, a scaling solution native to Bitcoin, could offer miners an additional $1.41 in revenue per PH/s/day.

It stated:

“The coinbase reward on Fractal is 25 coins for each block. And as of now, the market is pricing in ~$15 FB coin value. So, the total dollar value of FB coins available for Bitcoin miners per day is 960 blocks x 25 FB x $15 = $360,000.”

Marathon Digital is showing interest in artificial intelligence (AI) as its Bitcoin production slowed in August.

On Sept. 5, the BTC miner announced the appointment of AI experts Janet George and Barbara Humpton to its board, replacing Kevin DeNuccio and Said Ouissal, who resigned on Sept. 1 as part of a planned transition.

AI experts

Marathon emphasized that its new appointment had strong backgrounds in AI, data centers, and energy. Their leadership and success in driving innovation in complex industries were also critical factors in their selection.

According to the press statement, Humpton is the current President and CEO of Siemens USA, where she has led the integration of AI and industrial data to enhance the company’s operations.

On the other hand, George previously worked as Corporate Vice President and General Manager of Data Center & Artificial Intelligence at Intel Corporation. She has also worked with major companies like Oracle, Western Digital, Accenture, Yahoo, eBay, and Apple.

Marathon’s chairman and CEO, Fred Thiel, noted the appointments reflect the growing importance of AI data center strategies. He emphasized the need for AI expertise on the board to support the company’s AI-focused infrastructure expansion.

These appointments come as market observers have highlighted the vast revenue potential an AI pivot could present to Bitcoin miners. Notably, VanEck projected that Bitcoin miners could earn an average yearly profit of around $14 billion if they dedicate 20% of their energy capacity to AI computation by 2027.

Bitcoin production

Marathon’s Bitcoin production dropped 3% to 673 BTC in August on a monthly basis, while block wins fell by 2% compared to July. However, the company mined its 4,000th block during the month and increased its hash rate by 11% to 35.2 EH/s.

Thiel stated that the firm improved the operation of its sites and remains on track to reach its target of 50 EH/s by the end of 2024. He added:

“During the month, we energized almost 18 immersion containers in Granbury, Texas. We are converting a large portion of our Granbury data center from air cooled to MARA’s immersion containers, with plans to transition at least another 30 in September.”

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US lawmaker Senator Elizabeth Warren has continued her anti-crypto evangelism despite her thinning support base.

On July 25, she opined that foreign-owned crypto-mining operations pose a national security threat during a hearing of the Senate Committee on Banking, Housing, and Urban Affairs.

Warren stated:

“Foreign adversaries are using cryptomines to spy on US military operations. That is an obvious national security risk. But it isn’t the only risk. Foreign-owned cryptomines also threaten the energy grid.”

The anti-crypto lawmaker further highlighted the environmental threat of these mining facilities, pointing out that their activities could pose “a disaster for the environment.” She said:

“Increasingly, foreign companies are building cryptomining facilities on US soil. These mines are actually warehouses stuffed with computers that process crypto transactions and produce new crypto tokens. They’re loud, they’re hot, and they suck up a ton of electricity, which can crash the power grid. And that’s why many countries have banned cryptomining.”

[Editor’s Note: Bitcoin miners have been shown to be a net benefit to power grids through their ability to curtail demand, unlike Web 2 and AI server farms, which cannot be switched off. Further, Bitcoin miners are able to make use of surplus and waste energy when public demand drops. Lastly, unlike FIAT, Bitcoin energy usage directly correlates to available resources without allowing for derivatives that abuse the climate.]

Money laundering concerns

Warren also raised concerns about how foreign nationals acquire crypto mines in the US, noting that it presents enormous financial risks to the country.

According to her, foreign nationals often buy crypto mines with cryptocurrencies, circumventing traditional banking systems and anti-money laundering regulations.

She added:

“Foreign nationals have been able to buy up cryptomines in the United States in secret. How? By paying in crypto. Crypto allows them to bypass our traditional banking system and the anti-money laundering rules that are supposed to prevent any anonymous foreign money from coming into the US.”

Warren cited an example of a Chinese investor who secretly bought a $6 million crypto mine in Texas using digital assets and furthered that these foreign-owned mining facilities often repatriate funds to China using crypto.

Thus, she urged Congress to implement stricter anti-money laundering laws to prevent anonymous funding.

Thinning support base

Warren’s anti-crypto base is shrinking as Republican Senator Roger Marshall withdrew his support for the Digital Asset Anti-Money Laundering Act (DAAMLA) bill.

According to the official Congress directory, Marshall, who co-sponsored the bill with Warren in 2022, withdrew his support on July 24. However, 18 lawmakers remain in support of the legislation.

Warren claims the bill would attempt to bring the digital asset ecosystem into compliance with the existing anti-money laundering system. However, industry advocates have criticized the proposed legislation, saying it is part of the lawmaker’s effort to curtail the sector’s growth.

Marshall has not publicly commented on his decision, but some market observers believe it is linked to crypto’s growing significance in the current electoral cycle.

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Bitcoin miner IREN (formerly known as Iris Energy) is the latest crypto mining company looking to profit from the artificial intelligence market boom, according to its July 23 Analyst & Investor Day presentation.

The planned presentation shows that the firm will launch a GPU pilot at its Childress site in Prince George.

This follows the miner’s July 16 appointment of banking giant Morgan Stanley as its financial advisor to evaluate monetization opportunities in the AI data center market.

Is IREN ready for AI pivot?

This move comes less than two weeks after short seller Culper Research questioned IREN’s capacity to support the high-performance computers (HPC) essential for generative AI.

According to the short seller, IREN’s flagship Childress buildout lacks numerous critical features for HPC applications. It stated:

“IREN talks a big game of its HPC plans, but ultimately seems entirely disinterested in actually doing what it takes to compete in the space. Look no further than IREN’s own financials: the Company has spent less than $1 million per MW to build out its existing footprint, and tells investors it will complete the Childress build for a similar sub- $1 million per MW figure. Meanwhile, leading operators, analysts, and experts all confirm that the true cost to develop an HPC-ready data center is ~$10 to $20 million per MW.”

However, Mathew Sigel, the head of digital assets research at VanEck, said IREN’s latest announcement directly refutes “the Culper short report which claimed the site is not suitable to AI/HPC due to Lack of Power Redundancy, Liquid Cooling and Backup Fiber.”

IREN could not be immediately reached for comment as of press time.

Other miners advance towards AI

While uncertainty surrounds IREN AI pivot efforts, other crypto mining companies are making strides in their AI adventure as they seek to diversify their earnings following the April halving event, which impacted their revenues.

Over the past months, Bitcoin miner Core Scientific signed a 12-year deal with CoreWeave, an Nvidia-backed startup, that would generate more than $1 billion in revenue. Further, Hut 8 announced it raised $150 million in debt from private equity firm Coatue to expand its AI data center portfolio.

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NiceHash, a leading Bitcoin hashing power marketplace, has partnered with Marathon Digital Holdings to introduce new custom firmware for ASIC miners on its platform.

The new product, NiceHash Firmware, will leverage Marathon’s technology to enhance the efficiency and revenue of Bitcoin miners using ASIC devices. Miners who adopt this firmware will benefit from a low fee of 2%, which drops to 1.4% if they use NiceHash as their primary mining pool.

NiceHash Firmware aims to maximize miners’ profits by offering rewards for selling excess hashing power on its marketplace and boosting their ASIC machine’s efficiency.

The firmware’s features include an auto-tuning capability and a customized environment profile, which increase its market accessibility. The auto-tune feature allows adjustments based on the miners’ required power target, hashrate target, or percentage adjustment. The environment profile ensures compatibility with ASICs using air, hydro, and single—or two-phase immersion cooling systems.

Additionally, the firmware provides thermal protection to prevent overheating and includes a custom dashboard for detailed ASIC performance monitoring. The partnership with Marathon will ensure compatibility with NiceHash ASIC Manager, Foreman, and Awesome Miner.

Vladimir Hozjan, CEO of NiceHash, highlighted the significance of this addition to their product lineup. He said:

“Our joint efforts will ensure we stay ahead of this rapidly evolving industry. We believe that teaming up and combining our knowledge will strengthen our position in the market, drive innovation, set new standards in the mining space, and empower miners worldwide to achieve unprecedented efficiency and profitability.”

Echoing this sentiment, Marathon CTO Ashu Swami stated:

“This collaboration enables us to bring advanced safety and optimization features to Bitcoin miners of all sizes, enhancing their performance and profitability.”

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The Electricity Reliability Council of Texas (ERCOT) is considering integrating Bitcoin miners as Controllable Load Resources (CLRs) to enhance grid stability.

During a Texas Senate Business & Commerce Committee hearing, ERCOT CEO Pablo Vegas emphasized that classifying more Bitcoin miners as CLRs would improve the reliability of the state’s power grid.

A CLR is a major power consumer that can lower energy costs by avoiding high-price periods while providing essential grid stability services.

Vegas disclosed that crypto operations in Texas consume around 2,600 megawatts of energy, but only 500 megawatts are registered as CLRs, with just 130 megawatts actively participating. He stated:

“I would like to see all crypto become Controllable Load Resources (CLRs); that would be, from a liabiity standpoint, truly advantageous.”

The crypto community has responded positively to the news, with Brian Morgenstern, Public Policy Head at Riot Platforms, calling it the most significant aspect of the hearing.

Bitcoin mining enthusiast Jacobo Pascual added:

“As grid reliability degrades with the addition of intermittent renewable capacity, the value of bitcoin mining as a balancing tool increases (add electricity demand when renewable capacity is plentiful, cut immediately when generation is insufficient).”

Texas energy needs

Meanwhile, Lt. Gov. Dan Patrick has expressed strong concerns over the projected increase in the Texas power grid’s capacity, driven by Bitcoin miners and artificial intelligence data centers. The grid is expected to expand from 85,000 to 150,000 megawatts within the next decade, far exceeding the previously projected 110,000 megawatts.

Patrick commented:

“Crypto miners and data centers will be responsible for over 50% of the added growth. We need to take a close look at those two industries. They produce very few jobs compared to the incredible demands they place on our grid.”

He further noted that miners might profit more from selling electricity back to the grid than from their mining operations. Patrick prioritized supporting retail users and traditional businesses over niche industries that heavily burden the grid. He stated:

“I’m more interested in building the grid to service customers in their homes, apartments, and normal businesses and keeping costs as low as possible for them instead of for very niche industries that have massive power demands and produce few jobs. We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off.”

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Stablecoin issuer Tether has expanded its mining endeavors by collaborating with Swan’s Managed Bitcoin Mining service.

According to the press statement, the firm has dedicated an undisclosed amount of substantial capital to establish its Bitcoin mining operations through Swan.

Swan’s Managed Bitcoin Mining allows institutional investors to commit a minimum of $100 million to the Bitcoin mining ecosystem. Through the service, the firm plans to offer bespoke mining operations tailored to the specific needs of its clients.

Since August 2023, Swan Mining has spent over $330 million to increase its mining capacity to 7.5 EH. However, plans are to increase the capacity to 19.5 EH this year and about 100 EH by 2026.

Paolo Ardoino, the CEO of Tether, said:

“The collaboration with Swan in the mining sector has exceeded our expectations. Swan’s team has demonstrated an unwavering commitment to transparency and operational excellence, achieving rapid deployment of hashrate.”

Tether is the largest stablecoin issuer and revealed plans to invest approximately $500 million in mining. The company is the seventh-largest BTC holder globally, with approximately 75,354 BTC, valued at $5.23 billion.

Mining revenue dips

Tether’s foray into mining comes during a notable decline in daily revenue for BTC miners post-halving. Glassnode data showed a stark drop in total revenue from block rewards and transaction fees, hitting a low of 417 BTC as of May 7.

This downturn contrasts sharply with the initial excitement surrounding the halving and the emergence of innovative protocols like Ordinal Inscriptions and Runes. These protocols have garnered increased attention, stirred interest in the blockchain landscape, and contributed to miners’ earnings.

Ki Young Ju, the CEO of CryptoQuant, highlighted the transformative impact of these applications on miners’ income streams. He said:

“Building apps on Bitcoin has significantly changed miners’ income streams. Transaction fees now account for over 7% of their total revenue, up from 1% two years ago. This trend has persisted for the last four weeks and could potentially strengthen the network’s fundamentals.

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