Bitcoin Difficulty Drops, Can The Miners Survive The Halving Event?

Bitcoin difficulty drops for the first time this year but does this mean that the industry goes forward or the miners will face even more problems. Let’s find out in the Bitcoin news today.

Back on Monday, the Bitcoin difficulty level adjusted down by 7 percent and made it easier for the miners to solve algorithms and mine blocks. As to why this occurred, it seems to be in conjunction with the recent price drop of the leading cryptocurrency. The mining difficulty will reconfigure itself every 2016 blocks or about every two weeks. The difficulty modulates based on how long it takes for the miners to discover the previous 2016 blocks. It if takes about two weeks, the difficulty is tuned down.

Dovey Wan, the founder of primal ventures, suggests that the difficulty alternation could be present because of the end of the rainy season in China. Bitcoin’s hash rate dropped to more than 90 exahashes per second from the previous high of 100 EH/s. China is best known for its bitcoin mining and cheap electricity which supplements the previous one and has witnessed a gradual end to the rainy season. Dovey and other analysts believe this to be the main reason for the falling hash rate.

China’s southwestern provinces such as Sichuan, have some of the cheapest electricity tariffs and they even reach as low as $0.02 per kWh. During the rainy season, these regions gather the power of mother nature and utilize hydroelectricity plants to produce more energy. With the relative drought getting into the country, the miners will have to close the shops and go somewhere else.

Also, the recent price drop contributed the most to the bitcoin difficulty adjustment. The miners stop all operations because of the high price levels and once they do the power in the bitcoin network itself declines. This is also registered by the network and this adjusts the difficulty in order to re-incentivize the miners.  Bitcoin’s creator created this protocol via the autonomous monetary policy better known as bitcoin halving and every 210,000 blocks on about four years, the mining reward halves. This makes sure that the circulating supply is under control.