Following massive miner outages in China’s coal-rich provinces, Bitcoin's mining difficulty dropped 12.6%, the network's largest decline of the year.
Generally speaking, Bitcoin’s starting difficulty was 1 – every increase from this indicates exponentially increasing difficulty. Bitcoin’s mining difficulty is currently 20.608 trillion according to data queried from this journalist’s node, with the difficulty adjusted according to the amount of blocks that are added to the chain at a steady pace. Learn more: How Bitcoin Mining Works
Bitcoin’s mining difficulty is currently 20.608 trillion, according to data queried from this journalist’s node. This is down from the 23.581 trillion difficulty Bitcoin set nearly two weeks ago, an all-time high.
The sizeable drop corrects for the loss of hashrate the Bitcoin network experienced following coal mining accidents and subsequent inspections in Xinjiang. As they lost their chief sources of energy, bitcoin miners in this coal-heavy region went offline and Bitcoin’s hashrate fell by roughly a quarter.
Seasonal and government changes may swing hashrate levels and thereby affect network difficulty and mining economics”, said Ethan Vera , the CFO at North American mining pool Luxor. The drop is primarily caused by the inspections and associated power outages in Xinjiang, and although the majority of mining farms in the regions have recommenced mining, the network hashrate has not quite reached all-time high again,” Compass Mining CEO Thomas Heller told CoinDesk.
In recent years, seasonal and government changes have contributed greatly to hashrate swings and influences both network difficulty and economics,” Ethan Vera, the CFO of North American mining pool Luxor, told CoinDesk.
Bitcoin mining centralization
““While the 2,016 block epoch isn't perfect, it's been tested against all sorts of events and succeeded in doing the job.” Seasonal and government changes have the potential to swing hashrate levels and have profound impacts on network difficulty and mining economics,” Ethan Vera, the CFO of North American mining pool Luxor, told CoinDesk.
“Bitcoin’s difficulty adjustment algorithm is working exactly as planned, compensating for slower block times with a downward adjustment. Following massive mining outages in China’s coal-rich provinces, Bitcoin’s mining difficulty dropped 12.6%, the network’s biggest downward correction of the year.
Vera expects the substantial correction to put miner profitability over 40 cents per terahash, meaning roughly “90% mining margins” for miners on average.