How Does an Increase in Hash Rate Affect Mining Profitability?

An increase in the network's total hash rate means more miners are competing to find the next block. If the mining difficulty remains constant, the chance of any single miner winning the block reward decreases, thus lowering their individual profitability.

The protocol's difficulty adjustment will eventually increase the difficulty to restore the target block time, further requiring more computational work and increasing operational costs, which further reduces profitability for less efficient miners.