Bitcoin Mining Difficulty Records Largest Decrease in 1.5 Years
Bitcoin mining difficulty has dropped by 5.7%, down to 83.1 trillion hashes, as network hash rate fell below 600 EH/s following the halving event.
Bitcoin Mining Difficulty Records Largest Decrease in 1.5 Years
According to data from Bitbo, Bitcoin mining difficulty has decreased by 5.7% to 83.1 trillion hashes since block number 842,688. This adjustment marks the largest decline in difficulty since December 6, 2022, when Bitcoin mining difficulty dropped by 7%, with the cryptocurrency trading around $17,000.
Bitcoin's price fluctuations (green) and mining difficulty (orange). Source: Bitbo (05/10/2024)
Bitcoin mining difficulty is a unique mechanism of the world's largest cryptocurrency network, automatically adjusting after every 2016 blocks—approximately every two weeks. This adjustment aims to maintain the average block creation time of about 10 minutes by scaling the Proof-of-Work algorithm's difficulty according to the mining capacity (hashrate) at the time.
When more miners participate, difficulty and hashrate increase together, and vice versa. A decrease in miners reduces both difficulty and hashrate, making block mining less competitive and easier for miners.
According to data from The Block, the decrease in Bitcoin mining difficulty has led to a 10% drop in network hashrate since the most recent adjustment on April 24, 2024, bringing the 7-day moving average hashrate down from 639.58 EH/s to 578.74 EH/s as of May 9, 2024. Prior to the adjustment, the average time to mine a block was 10 minutes and 36 seconds.
Average hashrate statistics of the Bitcoin network. Source: The Block (05/10/2024)
The decline in hashrate has caused the cost of hashing power for Bitcoin to fall below $50 per PH/s per day on April 29, reflecting a drop in Bitcoin's price below $63,000 on the same day.
Since Bitcoin's mining difficulty decreased by 1% just before the end of March, preceding the halving event, subsequent adjustments increased difficulty by 4% and 2% respectively. These adjustments marked the lowest mining difficulty levels. During the two increases in difficulty, hashrate reached a record high of 88.1 trillion hashes, surpassing the peak hashrate in April 2024 at 650.29 EH/s. Hashrate has decreased by approximately 11% since the Bitcoin halving event on April 20, 2024.
Recent history of Bitcoin mining difficulty adjustments. Source: BTC.com (05/10/2024)
The final adjustment before the halving event occurred as Bitcoin miners increased hashrate to capture rewards before the block reward dropped from 6.25 BTC to 3.125 BTC post-event.
The surge of Runes Protocol cannot be overlooked as a factor influencing Bitcoin's mining difficulty. The protocol drove Bitcoin transaction fees high post-halving, akin to what Ordinals did a year ago.
Following the event, block 840,000 generated $2.4 million in Bitcoin transaction fees, far exceeding the $200,000 block reward. The world's largest cryptocurrency network achieved a record 104 blocks with transaction fee rewards higher than mining rewards.
However, by early May, as the Runes frenzy subsided, miner revenues halved, consistent with the typical effects of Bitcoin halving events.
