Recent data shows that the Bitcoin mining difficulty is on the decline and has hit its lowest since May. This is significant considering what this could mean for the Bitcoin ecosystem, specifically Bitcoin’s price.
Bitcoin Mining Difficulty Drops To 79.5 T
Data from CoinWarz shows that Bitcoin mining difficulty has dropped to 79.5 T at block 851,204 and hasn’t changed in the last 24 hours. This mining difficulty has continued to fall for a while, with further data from CoinWarz showing that it is down 5% in the last seven and 30 days.
Bitcoin mining difficulty refers to how hard it is for miners to mine a new block on the Bitcoin network. The difficulty usually reduces when there is less computational power on the power and increases when miners are mining faster than the block average time of ten minutes. The recent drop in mining difficulty suggests that more miners are leaving the Bitcoin network.
This is most likely due to the effects of the Bitcoin halving, which cut miners’ rewards in half. This has reduced the revenue from their mining operations, with many miners struggling to stay afloat, especially with increased competition. Bitcoin’s price action since the halving has also not helped, as the drop in the flagship crypto’s price has also affected their income.
Bitcoin miner f2pool recently highlighted the profitability of various categories of miners at Bitcoin’s current price. The mining firm noted that only ASICs with a Unit Power of 26 W/T or less can make a profit at Bitcoin’s current price range.
Crypto analyst James Van Straten also recently highlighted how “weak and inefficient miners” continue to be purged from the Bitcoin network. He claimed that the recent drop in mining difficulty shows that miner capitulation is closer to ending. Due to the low profitability that miners have faced since the halving, some have had to offload a significant amount of their Bitcoin reserves to meet operational costs, and others have had to exit the Bitcoin ecosystem entirely.
What This Means For Bitcoin’s Price
The decline in mining difficulty suggests that miner capitulation might be ending soon, which is a positive for Bitcoin’s price considering the selling pressure these miners have put on it. Bitcoinist reported that Bitcoin miners sold over 30,000 BTC ($2 billion) last month, which ultimately caused the flagship crypto to experience significant price crashes.
Crypto expert Willy Woo also attributed Bitcoin’s tepid price action to these miners and mentioned that the flagship crypto will only recover when the “weak miners die and hash rate recovers.” He stated that Bitcoin would have to shed weak hands for this to happen, with inefficient miners going into bankruptcy while other mines are forced to buy more efficient hardware.
Featured image created with Dall.E, chart from Tradingview.com
