New data from Glassnode revealed today that Bitcoin’s mining difficulty has dropped by 28%, making it the largest negative adjustment in cryptocurrency history.
What is Bitcoin Mining Difficulty Adjustment?
For clarity, Bitcoin’s mining difficulty is a metric that describes how difficult it is for miners to mine a new block on the network. As the difficulty increases, it becomes more difficult and miners will have to spend more computing power to find the next block hash and vice versa. As computing devices increase, the hash rate also increases, which in turn makes the network more secure and robust.
But just like the price, Bitcoin’s mining difficulty also fluctuates and automatically adjusts after each 2016 block is mined, which takes around two weeks as the average time to mine each block is 10 minutes. This, in turn, is referred to as a bitcoin mining difficulty adjustment. Generally, as more hash power enters or exits the network, the difficulty varies.
Chinese ban on Bitcoin mining
Over the years, hashing power on the Bitcoin network has steadily increased, reaching as much as 65% from China-based miners. This has led to a lot of controversy in the past, as some have argued that the Bitcoin network is centralized as most of its miners are concentrated in one region.
Fast forward to the second quarter of 2021, China has become overly aggressive towards miners. The country has launched a complete crackdown on mining operations and made the region unbearable for miners. As a result, China continues to lose its dominance over hash rate as miners are forced to shut down their machines and migrate to other countries like the United States and Kazakhstan to conduct their operations.
Although China’s ban looks like a negative development in the short term, it will help increase Bitcoin’s decentralization and security in the long run. The migration of the hash rate from China removes the excessive concentration of mining power in the country, and thus eliminates the possibility of the so-called “Chinese 51% attack” as claimed by some.
What does it mean for Bitcoin miners?
The negative adjustment was also followed by a decrease in Bitcoin’s hash rate. At the time of writing, the total hash rate, according to blockchain.com, is at a one-year low of 87.6 million TH / s, after dropping more than 50% in less than two months. In May, the hash rate hit an all-time high of 180 million TH / s.
In any case, a drop in hashrate suggests that there is less competition for mining a block, and as new players start capitalizing on the opportunity, the hashrate is likely to start rising again.
Binance Futures 50 USDT FREE Voucher: Use this link to register and get a 10% discount on commissions and 50 USDT when trading 500 USDT (limited offer).
PrimeXBT Special Offer: Use this link to register and enter the POTATO50 code to get 50% free bonus on any deposit up to 1 BTC.