Understanding Bitcoin Network Hash Rate Increases

Bitcoin mining sounds so simple in practice. Find electricity, plug in your miners, connect them to the network and boom — bitcoin is being mined.But of course, nothing is so simple, and effectively planning for the various factors impacting miner profitability is the most important function of a mining company.?

The most drastic impact to mining profitability is the difficulty increase — as more hash rate enters the Bitcoin network, a function called the difficulty adjustment changes the average required power needed to mine, either moving it up or down depending on the average rate of mined blocks in the previous period.?This means that the profitability of a given mining machine decreases over time, as newer and more efficient hardware is released.?In general, increases in difficulty lead to decreased profits for miners, but increased security for the average Bitcoin user.