Key Points
- Bitcoin’s mining difficulty has dropped significantly, potentially increasing profitability for miners.
- The decrease is one of the steepest since the FTX collapse in December 2022.
Bitcoin’s mining difficulty has experienced a substantial decrease. This could provide some relief for miners, especially the smaller ones who have struggled following the recent halving event. This reduction in the computational power required to validate transactions could indicate a period of increased profitability for miners.
Bitcoin Mining Difficulty Reverts to Pre-Halving Levels
On June 5, the difficulty of Bitcoin mining fell by 7.8%. It dropped from 83.6 terahash per second (TH/s) to 79.50 TH/s, effectively returning to levels seen before the halving. This has sparked some optimism among miners. The Bitcoin network automatically adjusts its difficulty every two weeks to ensure a consistent block generation time of approximately 10 minutes.
The recent decline is among the most significant since the FTX collapse in December 2022. This event triggered a downward spiral in Bitcoin prices, with a 10% drop within a week. Analysts at CryptoQuant, a provider of crypto data, see a clear parallel.
Decrease in Mining Difficulty Provides Some Relief
A decrease in mining difficulty can lead to a reduction in the network’s overall hashing power. This change could benefit smaller miners, who may face less competition and potentially return to profitability. High difficulty levels had previously forced some miners to shut down their rigs as the cost of operation exceeded the earnings from rewards.
While a lower difficulty may provide temporary relief, it’s important to remember that miners have been a significant source of selling pressure on Bitcoin in June. Over two weeks, they sold over $1 billion worth of BTC as the price fluctuated between $65,000 and $70,000.
This selling pressure, along with other factors such as the ongoing Mt. Gox saga and a German government entity selling its Bitcoin holdings, further pressured the market. This resulted in the price dropping to a low of $53,500 last week.
