The amount of computing power dedicated to bitcoin mining rose to record levels as more companies used the energy and data center space freed up by the Ethereum network upgrade. This was reported by Bloomberg.
Mining complexity, a measure of bitcoin miners’ computing power for the blockchain, jumped 13.6 percent in the two weeks ended Monday. It was also the biggest two-week adjustment since last May. Analysts say the increase is partly due to a decline in ether mining.
Ethereum’s technical update, known as Merge, took mining capacity completely out of the process. Alternative cryptocurrency mining also collapsed.
Ethereum miners have had to shut down their rigs because they no longer receive token rewards after the merge, leaving extra space in data centers to house bitcoin mining machines.
“Rack space for bitcoin miners has been limited, freeing up space paves the way for machines previously offline,” said Ethan Vera, chief operating officer of crypto-mining company Luxor Technologies.
In the past two weeks, he estimated that about 4 percent of current computing power has shifted from ether mining to bitcoin miners.
Higher levels of processing power are expected to reduce the mining income of bitcoin miners, who have already been hit by low bitcoin prices and soaring energy prices. The higher the mining power, the fewer bitcoins each miner will get, since the network only yields a limited number of tokens.
Ether mining consumed about half the energy used to mine bitcoins before the merger. While small-scale miners use the video cards of their copios, industrial-scale crypto miners use tens of thousands of dedicated devices (ASICs) at their facilities.
With the onset of cold weather, the cost of electricity is expected to rise even more – in many countries, the price of electricity changes dynamically depending on demand. With relatively small margins right now, mining depends on cheap electricity.