- Bitcoin mining difficulty dropped to 16%.
- There are a few reasons for Bitcoin mining difficulty’s drop.
- Chinese miners migrated their mining equipment from Sichuan to Xinjiang.
The Bitcoin (BTC) mining difficulty dropped about 16%, experiencing the second-largest negative change in its history since its creation. The first was a negative 18% in October 2011.
Yet, this is the largest drop in mining difficulty since the launch of ASIC mining in 2012. Regardless, notable blockchain market analyst Glassnode calculated that the Bitcoin mining difficulty has been adjusted by -16%.
We just observed the 2nd largest negative #Bitcoin mining difficulty adjustment in history: -16%
It topped the -15.9% change in March this year.
The only other time difficulty saw a larger downwards adjustment (-18%) was over 9 years ago, in Oct 2011.https://t.co/hXl4n3DAYR pic.twitter.com/7zgwMjNj13
— glassnode (@glassnode) November 3, 2020
Reason behind the Bitcoin mining difficulty drop
The mining difficulty gets adjusted spontaneously every 2016 blocks or approximately every two weeks. Nevertheless, the positive adjustments are more common than the negative adjustments. As such, this is a rare phenomenon.
Furthermore, the main reason for the mining difficulty drop is due to Chinese miners. During this period, they migrated their mining equipment from Sichuan to Xinjiang at the end of the rainy season.
In fairness, in October 2020, Sichuan represented 32% to 37% of the entire hashrate in China. In April 2020, Xinjiang accounted for 35.76% of Chinese hashrate; this was when the dominant share of hashrate transitioned to Xinjiang.
As per BitInfoCharts, the Bitcoin hash rate has fallen to 117.2 EH/s from 157 EH/s when it was registered on October 17. In addition, analysts hope the hash rate will recover. They are expecting the next adjustment to be positive as miners plug back to the system after exiting Sichuan. Nevertheless, the next adjustment will be around the third week of November.
Normally, the bitcoin mining difficulty is due to an increase in BTC market value. This time, BTC increased in price alongside an unexpected decrease in mining difficulty. According to CoinGecko, each BTC is worth $13.7K with a 24-hour trading volume of over $23 billion, at the time of writing.
Read Also: What You Need to Know About Bitcoin Mining Difficulty
