Mining Difficulty Reduction Will Stabilize Bitcoin’s Network
The second largest drop in Bitcoin mining difficulty occurred today by around 16%. The mining difficulty is set to adjust itself every 2,016 blocks and should serve to stabilize the network and increase profitability for mining the coin.
The recent crash in Bitcoin’s price that occurred on March 13th has in turn, reduced the network’s processing power (hash rate). This would indicate that some miners abandoned the race to bring new coins into circulation when it became cheaper to simply buy BTC.
A drop such as this has not occurred since miners began to use Application Specific Integrated Circuits (ASICs) to produce the currency back in 2013. ASICs are extremely powerful computers that are designed to carry out a single purpose: To mine Bitcoin.
Mining difficulty is indicative of the global competition for Bitcoin mining. It refers to the energy and time required to validate transactions. It is a self-sustaining mechanism, and the recent drop should encourage greater participation for securing the network.
UK-based mining company Argo Blockchain have recently purchased 500 Antminer S17 rigs and are hoping to increase the number of their miners by 10,000 before the end of Q1, 2020. The machines were bought online by the mining giant Bitmain, who plan to expand their operations in Texas throughout the course of the year.
Concerns that Bitcoin’s overnight plummet might have ramifications over the security of the network seem to have been ill founded. As predicted, it appears that many miners switched off their rigs as the cost of production exceeded the price of the coin, but this has only opened the doors for new players to enter the arena.
Combined with the eagerly anticipated halvening in May, we could be on the brink of a very bullish season.