Bitcoin‘s mining difficulty saw a significant 7.8% decrease on June 5, 2024, marking the largest drop since the FTX exchange collapse in 2022. This adjustment lowers the difficulty to pre-April block reward halving levels, potentially benefiting smaller miners and mining pools by increasing their profitability.
Why Did Mining Difficulty Decrease?
According to Coinwarz, Bitcoin’s mining difficulty decreased from 83.6 terahashes per second (TH/s) to 79.5 TH/s, a level last observed in March. Terahash measures the number of hashes a mining device, pool, or network can produce per second. This decline indicates that some miners have turned off their devices due to low profitability, reducing the network’s overall hash power.
What Impact Does This Have on Miners?
The block reward halving in April significantly affected miners’ revenues, dropping daily earnings from $78 million to $26 million. This financial strain has forced some miners to cease operations. However, the recent difficulty adjustment might offer relief to those still in operation, as it reflects the network’s adjusted hash power, which is similar to the post-FTX collapse scenario in December 2022.
Implications for Miners
– Smaller miners now have a higher chance of successfully mining blocks and earning rewards.
– Some previously shut down mining pools might reactivate due to reduced competition.
– The adjustment could provide relief during North America’s summer when mining operations face frequent interruptions.
CryptoQuant’s research director, Julio Moreno, noted that miners’ profitability has recently taken a hit, leading to the current decrease in mining difficulty. The drop allows smaller miners a greater opportunity to mine blocks and earn rewards in BTC. This shift could potentially reactivate some mining pools that had previously shut down due to high operational costs and low profitability, providing some relief during the summer months in North America when mining activities are often hampered.
Despite these adjustments, only the most efficient mining devices remain profitable at Bitcoin’s current price, indicating that Bitcoin might be nearing its bottom as selling pressures continue to affect market dynamics.