Bitcoin mining drops amidst the situation in China

On Sunday, Bitcoin mining dropped for the fourth time in a row. This means that it has halved the mining difficulty rate from mid-may. This got many by surprise as they expected the crackdown in China would increase the mining difficulty. 

Difficulty drop series

In mid-July, the mining difficulty dropped by 4.8%, according to data from Bitcoin site BTC.com. To reach the current difficulty level, the adjustment occurred at block 691,488, which pushed the mining level to 13.7 trillion from 14.4 trillion. This is the lowest it has ever been since mid-2020. This halved from 25 trillion on May 13.

The current mining adjustment follows difficulty drops with up to a 16% decline as of May 29. There have been a series of further adjustments leading to a 5.3% drop in June and then 28% in July, which has been the biggest difficulty drop in mining history.

What does mining drop indicate?

Bitcoin mining difficulty is how hard or easy it is to mine a block. That means how hard or easy it is to solve the algorithm to verify a transaction or release a block. Greater mining difficulty requires a higher computing power comparatively. The bitcoin mining difficulty adjustment happens about every two weeks or after every 2,016 blocks. Bitcoin is automatically programmed to do a block in ten minutes.

The main cause of frequent mining difficulty adjustments is the current cryptocurrency crackdown happening in China. Miners have been affected as most of them are in China. 

As mining difficulty drops, the Bitcoin hash rate and Bitcoin transaction fees also drop. The difficulty drops mean that supply will not be altered even when the demand increases. 

At the moment, Bitcoin demand is still low as investors are speculating on the market condition. Investors are also venturing out to alternatives such as NFTs. It is a matter of time that Bitcoin will be back on its feet, and the mining difficulty will increase. 

Despite the negative publicity on Bitcoin, bitcoin hardcore fans are stocking up on the reserves before the prices shoot up.

Image by Marco Verch Professional from Flickr.