During the 2018 bear market where bitcoin price plunged more than 80% from the ATH in December 2017, Bitcoin difficulty has been increasing steadily. Now seems that time came for the difficulty to feel the drop like all the cryptocurrency ecosystem.
According to data from Blockchain.com, the drop is by 15% in hash rate and mining difficulty. The hash rate is the total computing power in the bitcoin network and the difficulty is how easy is to mine a block.
Many speak about bitcoin death spiral in case miners stop mining bitcoin. But bitcoin by design is coded in a way that when mining is not profitable anymore the difficulty drops making possible for new miners to start mining again.
While some people are scared of a “mining death spiral”, I’m ecstatic that we’re getting some great data that proves how beautiful Bitcoin’s difficulty adjustment is and that it works as designed. Very important for long-term holder psychology.
— Marty Bent (@MartyBent) November 30, 2018
re: mining death spiral
“Once the price hits <insert random number> miners will turn off their equipment and bitcoin will die”
Nope. That’s the beauty of the difficulty adjustment. Every miner that is turned off increases the profitability of remaining miners.
— Matt Odell (@matt_odell) November 25, 2018
This difficulty drop in mining bitcoin is the second largest one since the bitcoin creation. The largest drop in bitcoin mining difficulty was in 2011 when difficulty dropped by 18 %, and then in two months price doubled and 15 months later the price was 20 times higher.
Fernando Ulrich, XDEX Chief Analyst posted a tweet listing all the mining difficulty drops during the bitcoin life stating that the actual drop is the second largest one.
#Bitcoin just had its second largest drop in mining difficulty in history: -15.1%. This is the current ranking:
— Fernando Ulrich (@fernandoulrich) December 3, 2018
How does the mining difficulty adjustment happen?
When mines shut down there is not enough computing power in the network to solve the complex algorithms to find (mine) new blocks. Therefore mining difficulty drops making possible for the reduced hash rate to solve blocks and this adjustment happens every 2016 blocks.
At the actual lower difficulty, it will be easier for new miners to restart mining bitcoin and get rewarded for that.
What is your opinion about the recent Bitcoin mining difficulty decline? Let us know your opinion in the comments below.