Bitcoin mining difficulty records largest decrease in 1.5 years
Bitcoin mining difficulty dropped 5.7% to 83.1 trillion hashes as the network hash rate dropped below 600 EH/s post-halving.
According to data from Bitbo, Bitcoin mining difficulty since block number 842,688 has decreased by 5.7% to 83.1 trillion hashes. This is also the largest difficulty reduction adjustment since December 6, 2022, when Bitcoin mining difficulty decreased by 7% and the king coin was trading around 17,000 USD.
Statistics on Bitcoin price fluctuations (green) and BTC mining difficulty (orange). Source: Bitbo (May 10, 2024)
Bitcoin mining difficulty is a special mechanism of the world's largest cryptocurrency network, automatically adjusting every 2016 blocks - about 2 weeks. In order to maintain a block generation time of about 10 minutes/time, the Bitcoin network will automatically increase or decrease the difficulty of the Proof-of-Work algorithm corresponding to the mining capacity (hashrate) of the miners at that time.
When there are many miners mining. Difficulty and hashrate will increase together and vice versa, if the number of miners decreases, difficulty and hashrate decrease. This also means that the competition for miners to mine blocks will decrease and make it easier for them to mine.
According to data from The Block, the decrease in Bitcoin mining difficulty has resulted in a 10% decrease in the network's hashrate since the last adjustment on April 24, 2024, from a 7-day moving average of 639.58 EH/s. down to 578.74 EH/s on May 9, 2024. Before the adjustment, the average block mining time was 10 minutes and 36 seconds.
Average hashrate statistics of the Bitcoin network. Source: The Block (May 10, 2024)
The decrease in hashrate caused Bitcoin hash price to slide to an ATH low of less than 50 USD per PH/s per day (0.05 USD per TH/s per day) on April 29. This is explained because Bitcoin price also dropped below 63,000 USD on the same day.
Since Bitcoin difficulty decreased by 1% at the end of March, the time immediately before the halving, and the two post-halving upward adjustments were 4% and 2% respectively, this is the lowest difficulty level. At two difficulty increases, the hash rate was raised to a record level of 88.1 trillion hashes, surpassing the highest hash rate in April 2024 of 650.29 EH/s. The hash rate has decreased by about 11% since the Bitcoin halving event on April 20.
History of recent Bitcoin mining difficulty adjustments. Source: BTC.com (May 10, 2024)
The final adjustment increase before the halving occurs when Bitcoin miners increase the hashrate to earn the final mining rewards before the block reward drops from 6.25 BTC to 3.125 BTC post-event.
The heat of Runes Protocol is a factor that cannot be ignored when mentioning the reason why the difficulty of mining Bitcoin increases. The protocol pushed up Bitcoin transaction fees post-halving, similar to what Ordinals did a year ago.
Post-event, block 840,000 generated $2.4 million in Bitcoin transaction fees. The figure far exceeds the block mining reward of about $200,000. The world's largest cryptocurrency network has reached a record 104 blocks with transaction fee rewards higher than mining rewards.
However, by early May, when the Runes fever subsided, miner revenue had dropped by half, consistent with the usual effect of Bitcoin halving.
