How Does Increased Network Difficulty Affect a Mining Pool’s Profitability?

Increased network difficulty means that the computational power required to find a valid block is higher, making it harder for the pool to earn the block reward. This directly reduces the frequency of successful block discoveries for a given amount of hashing power.

To maintain profitability, the pool must either increase its total hashing power, attract more miners, or potentially increase its pool fee. It can also lead to smaller, less efficient pools shutting down.