Bitcoin difficulty drops by 9 percent

The difficulty level for the mining of bitcoin was lowered for the second time in a row since the halving of the compensation in the second week of May.

The goal of the bitcoin protocol is for the network to produce a new block every ten minutes. To maintain the rate of production, the protocol automatically regulates the difficulty of the calculation (mining difficulty) in relation to the total calculation capacity of the network. The regulation takes place every 2016 blocks, or in round throws two weeks.

On May 12, the compensation for bitcoin miners halved from 12.5 bitcoin per block to 6.25 bitcoin per block. As expected, this led to many smaller diggers disconnecting their equipment from the network or moving to dig other types of cryptocurrencies. The large diggers had already largely compensated for the halving by investing in more efficient equipment, CoinDesk writes.
Increased profitability

Overall, however, the total compute capacity of the network declined shortly after halving. Since then, therefore, the Protocol has compensated for the loss by two reductions in severity by six percent on 20 May and recently by 9.25 percent. The reductions mean that profitability is improved and more diggers enter the game or connect even older machines.

In parallel, the latest models of ASIC equipment such as the Antminer S19 and WhatsMiner M30S are now fully shipped, and the order books are filled until September. Meanwhile, the monsoon over southwest China replenishes the water reservoirs and the price of electricity in the region, where much of the bitcoin mining takes place, has fallen to $0.03 per kilowatt-hour. Such a low electricity price makes it profitable to connect older equipment such as the Antminer S9.
Higher compute capacity

A not too wild guess is therefore that the difficulty level will increase the upcoming adjustment because the calculation capacity is now increasing. The difficulty level is that bitcoin diggers try to find a random number that, together with other inputs, results in a hash value that must fall below a threshold. The difficulty of finding the random number decreases if the threshold is adjusted up (the “hit surface” increases). This is encoded in the protocol and happens automatically.

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