Bitcoin mining difficulty has the second largest historical decline

Bitcoin’s mining difficulty dropped around 18% in the early hours of today.

This is the second largest decrease in mining difficulty in Bitcoin history, in the era of ASIC miners, after it fell by 18% in October 2012, according to estimates from various sources.

Second CoinMetrics sample, the period between Bitcoin’s last two mining difficulty settings was slightly longer than usual. As noted, the block confirmation time remained in the month of October at 13 minutes of waiting, meaning that “in the last difficulty adjustment period it lasted 24.024 seconds (about 16 days + 18 hours)”, which represents 19.2% more than the average block confirmation time, entered by design in Bitcoin on the basis of 10 minutes.

The mempool.space portal shows that the average transaction fee exceeds 280 sat / vB, at the moment, equivalent to 5 US dollars. Likewise, the website indicates that the total size of the mempool is 107 MB in weight, with 69,700 transactions pending. This moderate level of congestion still keeps transaction fee prices high compared to lighter periods.

The mining difficulty is an estimate of the effort required to mine bitcoins, being adjusted approximately every 2 weeks depending on the available hash rate. Currently, the mining difficulty is 16.5T, according to Coinwarz.

The hash rate and mining difficulty decrease, but the bitcoin price increases

The change in Bitcoin’s mining difficulty was preceded for 15 days by a sharp decrease in Bitcoin’s hash rate, as well as network congestion and a general increase in transaction fees.

It is speculated that the drop in the Bitcoin hash rate could be caused by the migration of miners in China to cheaper energy sources right now. This is because at the end of the rainy season in Sichuan, cheaper hydroelectric power is no longer available and the miners therefore choose to use other sources, such as coal and other fuels.

However, the price of Bitcoin continued to rise substantially, apparently unaffected by this drop in mining difficulty and hash rate. This could create attractive profit margins for less efficient miners, as long as the hash rate and mining difficulty do not increase.

During the latest difficulty adjustment, which took place on October 17, Bitcoin maintained an average price of $ 11,500. Today, at the time of this writing, Bitcoin is priced at $ 13,500, according to CoinMarketCap, which represents an estimated 18% revaluation in global markets from the previous period.

Right now, Bitcoin mining profitability remains well above the average of the previous months. Indeed, is the time when it was most profitable to mine Bitcoin this year, after reducing the block reward or halve, occurred in May of this year.

However, if we assume that this adjustment originates in the migration of miners to China, we could estimate it this window will not stay open for long, since it would be a matter of days before the miners re-installed and resumed work. This would undoubtedly lead to at least an adjustment of the mining difficulty in the next adjustment, as well as an increase in the hash rate or hash rate.