Bitcoin mining difficulty is reduced by 15.95% again: the drop is the second highest in history. Why is this?

Compilation: Lin Shihao

Source: Tweet

Bitcoin mining difficulty is an important indicator of competition between miners. Recently, its mining difficulty has dropped by 15.95%. This is the second time that Bitcoin has significantly lowered the difficulty of mining. As of now, Bitcoin is the world's largest blockchain network by market value.

Recently, due to the sharp drop in the price of bitcoin, it is difficult for miners to sell high prices even after they have acquired new bitcoins. Therefore, the reduction in the "mining difficulty" of bitcoin actually means that some miners have opted out This "mining game". Reducing the difficulty of mining may be beneficial to those who are still "continuing the game"-because reducing the difficulty of mining is equal to making it easier to produce new mines, coupled with the reduction in the number of peer competitions, a single miner can obtain daily mining output from Bitcoin To get more shares.

At about 3 a.m. UTC on March 26, Bitcoin's mining difficulty was adjusted to 13.91T, and the difficulty index was significantly lower than 16.55T in the previous adjustment cycle (March 9). Two weeks ago, Bitcoin suffered its worst sell-off in seven years, and since then, Bitcoin has only partially rebounded.

Mining requires the use of powerful and power-hungry dedicated computers. These mining companies usually pay huge bills by selling bitcoins or lending with bitcoin mortgages.

After the second major reduction in Bitcoin mining difficulty, the third major difficulty reduction in Bitcoin history also reached 15.13%, which is a record set by the Bitcoin price in December 2018. The biggest decline in the difficulty of mining in Bitcoin history can be traced back to October 2011.

Bitcoin's mining difficulty is set to be adjusted every 2016 blocks (usually takes about 14 days) in order to keep the average production interval of the blocks at about 10 minutes.

In the 14-day period, if more and more miners withdraw, due to the lack of sufficient operations, the time for the remaining miners to produce these 2016 blocks will increase. Therefore, in order to make mining in the next cycle of Bitcoin less difficult, the Bitcoin ecosystem must reduce its mining difficulty.

Similarly, if a large number of miners flood in during any 14-day period, this will shorten the average production interval of the block, which means that Bitcoin will increase the difficulty of mining in the next cycle. Therefore, due to increased competition, the number of Bitcoins generated by a single miner will also decrease.

In the past 17 days, the situation of miners has been even worse-on March 9 (a few days before the stock price plummeted on March 12), Bitcoin mining difficulty reached the highest level in history. It will take more than two weeks for the mining industry to adjust itself.

According to the data of mining pool f2pool, the recent plunge of Bitcoin price, coupled with unprecedented mining competition (because Bitcoin mining difficulty reached the highest in history), assuming that the average power cost is $ 0.05 per kWh, it is equal to the past two More than 24 old-style Bitcoin mining machines are losing money every day during the week.

In the past two weeks, the average total computing power generated by all mining equipment on the Bitcoin network has also dropped from 118 EH / s in early March to about 99 EH / s now.

Chris Zhu, co-founder and chief operating officer of Chinese mining pool PoolIn, said on March 12 that he expects Bitcoin's hash rate to drop by 20% to 30% in the coming weeks after the price has plummeted. At that time, the hash rate of the major mining pools dropped several times.

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