Submit Blog Home » Cryptocurrency News » Cryptocurrency News » Bitcoin’s Mining Difficulty Sees Largest Percentage Drop in 9 Years Bitcoin’s Mining Difficulty Sees Largest Percentage Drop in 9 Years November 3, 2020
Nov 3, 2020 at 09:29 UTC Updated Nov 3, 2020 at 09:47 UTC
Negative difficulty adjustments in Bitcoin’s history
Bitcoin’s mining difficulty just recorded its largest percentage decrease since the advent of ASIC mining machines in late 2012, dropping by just over 16% and giving miners a reason to celebrate as their profitability is set to increase significantly.
Difficulty dropped to 16.787 trillion at around 09:00 UTC on Tuesday, its lowest level since June, according to data aggregated by BTC.com.The adjustment marks the second largest percentage decrease of all time.
Mining difficulty is a relative measure of the amount of resources required to compete for mining new bitcoins.It climbs or falls at the end of roughly two-week epochs (or 2016 block periods) depending on whether the total estimated hash power consumed by the network has also increased or decreased.
Post-ASIC difficulty adjustments for Bitcoin with average hash rate Source: BTC.com, CoinDesk Research
Tuesday’s significant adjustment comes as many mining companies in China’s Sichuan province are taking machines offline and relocating to cheaper energy sources after the end of the region’s rainy season, as CoinDesk previously reported.
Over the next two weeks until the next adjustment, miners with machines still online will enjoy a welcome respite after battling an unusually difficult year, which Thomas Heller, COO at mining software company HASHR8, described as “truly one of a kind.”
As bitcoin’s price has increased significantly over the past few months and the amount of power needed to now mine new bitcoins has decreased, “margins for efficient miners will significantly widen,” explained John Lee Quigley, director of research at HASHR8, in a note published Monday.Further, “a myriad of inefficient miners will be able to mine profitably again,” he added.
In short, between now and the next difficulty adjustment will be “extremely lucrative” for bitcoin miners, Quigley told CoinDesk in a direct message.
Negative difficulty adjustments in Bitcoin’s history Source: BTC.com, CoinDesk Research
Beyond its size, Tuesday’s adjustment is also notable because of the infrequency of negative adjustments.Only 17% of adjustments are negative, and even fewer – roughly 2% – are double-digit percentage decreases.
“What we are seeing now is indeed an anomaly,” said Quigley.“Higher prices almost always lead to higher difficulty.”
Total difficulty adjustment periods grouped by direction since Bitcoin’s creation Source: BTC.com, CoinDesk Research
Machines being relocated by Asia-based mining companies are expected to come back online over the next few weeks, moreover, and other miners may bring more machines online in the coming weeks to take advantage of the increased period of profitability, which could cause a difficulty increase over the coming adjustment periods.
Improved margins for miners during the hashrate drop are temporary, said Daniel Frumkin, engineer and technical writer at Slush Pool, the first ever bitcoin mining pool launched by Braiins in 2010.
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