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Difficulties in the mining sector of Bitcoin have fallen by more than 7 percent in the last 24 hours, while the repercussions of the prolonged defeat of the market continue. Despite a recent upturn that has led bitcoins to exceed $ 4000, many miners still have difficulty remaining profitable or even. CCN reported in November that cryptocurrency miners in China are unloading their mining plants or reusing them for non-blockchain uses such as video rendering and cloud computing.
More recently, CCN has also reported that several mining cryptocurrency operations in Europe and Asia are ceasing due to the bear market, including Bladetech, a startup behind what would have been the largest encryption facility in the UK.
Difficulty of regulation and implications
In light of the reduced hahrate of the blockchain caused by the miners' withdrawal, the network is designed to automatically adjust the level of difficulty in order to avoid a situation where there is a huge backlog of transaction confirmation and high confirmation commissions. The 7 percent decline in difficulty could be the beginning of a similar difficulty adjustment model as bitcoins below $ 6,000 are increasingly becoming a prolonged reality.
As shown in the above graph, the Bitcoin difficulty dropped from about 5.8TH / second to about 5TH / second on December 19th. In contrast, Bitcoin Cash and Bitcoin SV remained stable at around 1TH / second.
The implication of this is that while the interest in bitcoin mining is declining, this has not had a positive impact on the extraction of Bitcoin Cash and Bitcoin SV. In other words, miners leaving bitcoins are not simply switching to other cryptographically similar cryptocurrencies, but they are abandoning the cryptocurrency mining space altogether. This is unlikely to create interruptions in the normal operation of bitcoin in the short term, as the dynamic difficulty adjustment system will ensure that there is enough hashpower to service the network.
However, the real danger lies in the fact that the existing situation can itself become an obstacle to the adoption of long-term mass cryptocurrencies if low prices persist. The broader cryptocurrency market has a well-documented history of closely tracking the bitcoin moves, which means that a perceived reduction in interest in the mining bitcoin will eventually lead to an exodus of miners from cryptocurrency that could at least theoretically compromise the security of cryptocurrencies.
At the moment, it is still too early to say that this is happening, and a significant upward movement in prices could change the situation almost from one day to the next. CCN is monitoring the fix adjustments and will bring more updates as they arise.
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