Bitcoin saw a negative mining adjustment of 6% this week, causing the cryptocurrency to continue mining every ten minutes.
This indicates that the cryptocurrency is rapidly seeing a decline in the number of miners competing to validate transactions, suggesting that the implications of the recent mining rewards halving event are starting to conquer the cryptocurrency.
The latest adjustment to mining difficulty has come about simultaneously with a significant drop in the hash rate of the benchmark cryptocurrency, which continued to drop in the weeks since the mining rewards halved.
However, it is important to note that Bitcoin was able to avoid the “miner-death spiral” that some analysts had predicted.
Bitcoin sees sliding hash rate as smaller miners shut down their rigs
Bitcoin’s hash rate has dropped quite a bit recently.
As we looked at the chart below, the hash rate reached new record highs just before the block rewards cut in half earlier this month.
This was likely due to mine equipment upgrades by miners in an attempt to combat the loss of profitability resulting from the event.
However, in the time since it occurred, the cryptocurrency’s hash rate has slowed, just as new lows for 2020 are starting to fall into an intense downward trend.
It appears that this decline has been dampened by the huge transaction costs miners have incurred recently, reducing the incentive due to the reduced block rewards.
Arcane Research brought this opportunity in a recent report, saying:
“Part of the reason many miners have stayed is likely to be related to higher fees recently, which covers some of the miners’ pay loss.”
A drop in hash rate was not unexpected, as many analysts had previously figured out the possibility that it would cause massive capitulation among miners if their profitability disappeared.
BTC avoids “Death-Spiral” when mining difficulties decrease
The aforementioned 6% mining problem decline in Bitcoin has made it easier for the miners who ran their rigs to validate transactions.
Arcane Research also spoke about this, explaining that this is a direct result of the reduced profitability of mining BTC after halving.
“This week, the mining difficulty for Bitcoin decreased by 6% … This is an indication that fewer miners are competing to solve the puzzle to win the freshly minted bitcoin as it became less profitable for mine after halving.”
Importantly, they also note that this adaptation is far from a “death spiral” that many had predicted.
Some, however, expected a much larger drop and that this would be the end for a large group of miners. This has not happened and the adaptation was not among the largest we have seen in the past. “
The biggest adjustment to the Bitcoin mining difficulty ever seen was 18.03%, which occurred on October 31, 2011.
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