How Does Difficulty Affect a Miner’s Profitability?

Mining difficulty is a measure of how hard it is to find a new block. As difficulty increases, miners require more computational power (hash rate) to find a block and earn the block reward.

This means a miner's share of the total block rewards decreases for the same amount of hashing power. Higher difficulty directly reduces the expected number of coins a miner will earn over time.

Consequently, operating costs like electricity and hardware amortization become a larger percentage of the reduced revenue, decreasing profitability.