The difficulty of Bitcoin (BTC) falls in response to the fall of Blockchain's mining activity

It is rare to see falling levels of difficulty in the Bitcoin mining sector – if anything, they are designed to increase after every two weeks. However, these are extraordinary times for cryptocurrency. The difficulty level is now set to go down even lower for the third consecutive time. The next adjustment will see Bitcoin levels of difficulty decrease to 13%, the most significant decline since 2011.

What's behind the drop?

There are several reasons behind the decline in Bitcoin difficulty levels. However, the main reason is the recent fall in BTC prices.

The Bitcoin miners are rewarded for their BTC efforts. The fall in BTC prices means that miners have to settle for less premiums, and this is not enough for most miners. As such, more and more miners are laying down their tools as they plan to wait for the bear market in progress. If the market lasts much longer, then mining may not be more profitable for the miners – this would leave only the institutional ministries with sufficient resources to sit down, as well as the belief that BTC prices can finally rebound.

The fact that there are fewer Bitcoin miners means that even the hashing rate of the network is lower. As such, there is not enough power to solve the algorithm that determines the difficulty levels. As such, the only option is to lower difficulty levels.

The role of Bitcoin Cash in all this

The decline in Bitcoin is an important development. However, another important development follows: the bifurcation of Bitcoin Cash.

The BCH network has recently split into two chains that almost immediately started competing against each other. Craig Wright, one of the key figures behind the split, has proposed selling his BTC from the USD network to finance operations. Considering that both networks have a lot of BTCs in their possession, Wright's threat to sell the BTC of his network may have contributed to the collapse of prices and the lack of investor confidence.

There are also concerns that both chains may have consolidated their hashing rates and redistributed them to the mining currencies on their new networks. This could also have contributed to the fall in hashing rates on the Bitcoin network and, consequently, to a drop in the levels of difficulty. It is important to note that Bitcoin Cash held a significant amount of hash rate power.

Looking at the future

The present seems uncertain at the moment as the bear market is still moving and should last for several months. However, analysts have good news for both miners and investors: the future is bright.

For beginners, history shows that a drop in levels of mining difficulties is often followed by an increase in cryptographic coin prices. Analysts also expected that sales pressure would decrease over time, as the drop in the level of difficulty would lower the extraction costs. This will also reduce the mining pressure. Combined, these factors should help BTC's prices rebound.

Conclusion

Bitcoin mining difficulties are expected to decline significantly for the first time since 2011. This decline is caused by lower mining activity, which was attributed to the fall in BTC prices due to the persistent bear market. For now the present is uncertain, but the future looks bright.