As Bitcoin price drops below $4k, even briefly touching $3,500, the hash rate of the bitcoin network took a beating as well resulting in the fall of Bitcoin mining difficulty as well. This time, difficulty drops 15 percent, the second-highest in the history after the highest in November 2011.
Bitcoin Mining Difficulty Makes Adjustment with the Price
This year saw a continuous ascent in Bitcoin mining difficulty until two months back when it started dropping down as shown in the chart below.
During the October month, Bitcoin price maintained stability around $6,500 mark but in the mid of November, prices fell down to $3,500 level.
During these last two months, as prices took a hit, Bitcoin miners shut down their rigs that resulted in the fall of hash rate and subsequently the mining difficulty.
Actually, every two weeks, the hashing difficulty algorithm of Bitcoin is adjusted in order to maintain the usual 10 minute block time. Since the prices took a hit in mid-November, it has been already adjusted twice. And as a result of this adjustment, the difficulty has been on a downward spiral.
Mining difficulty is adjusting itself to the falling price as recently stated by the CoinShares in its report on Bitcoin mining,
“Difficulty resets to a lower level and the all-in cost of mining falls to a level where it is again right below the price of bitcoin.”
Now, Bitcoin mining difficulty is seeing a fall of 15 percent which is the biggest one in the past 7 years. In the history of Bitcoin, this is the second highest drop after November 2011’s 18 percent fall.
Fernando Ulrich, the Chief Analyst at XDEX, shared the data on Twitter,