According to BTC.com, at a block height of 745920, bitcoin mining difficulty was decreased by 5.01%. This reported adjustment is the largest decrease in bitcoin mining in over a year.
The earlier mining difficulty used to be at 29.153 TH/s. It has now been reduced by over 5% to 27.69 TH/s.
Why Mining Difficulty Matters
Bitcoin is a decentralized blockchain, that uses miners to verify and batch transactions into a block. The mining difficulty represents the difficulty required to mine the next block. The mining difficulty is adjusted around every two weeks. The goal of the adjustment is to make it such that it requires around 10 minutes to mine the next block.
Whenever more miners and mining companies enter the competition, bitcoin’s difficulty is usually increased. However, when mines leave the competition, the difficulty is decreased to make it easier to mine the next block and make the process lucrative.
BTC.com shows that the mining difficulty was decreased by 5%. It could confirm the substantial losses the miners have been dealing with during the bear market.
A Financial Times report showed that the total revenue paid to miners fell to its lowest in more than a year. The shares of mining companies like Marathon Digitalt, Hut 8, and Argo Blockchain are down by around 40%.
Multiple reports also suggested that Bitcoin miners are engaged in dumping their Bitcoin holdings. The crash of Bitcoin below $19K was probably due to one such selloff by the miners.
Is Reducing Bitcoin Mining The Answer
Data from Blockchain.com shows that mining revenues are still really low despite an increase in BTC prices. The thirty-day average of miner revenue is currently at around $18 million, the lowest since December of 2020.
Until BTC prices rally, mining difficulty decrease could provide relief for the miners that are currently struggling due to financial volatility. Data from BTC.com reveals that the next adjustment is due in 14 days and is further expected to decrease the mining difficulty.
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