The adjustment of Bitcoin mining difficulty rate is one of the important innovations behind the successful Nakamoto consensus. As the number of miners increases or decreases, the difficulty of Bitcoin PoW also increases or decreases after each 2016 block. Today the community has witnessed an increase of nearly 7%.
What does increased mining difficulty mean for Bitcoin?
The Bitcoin mining difficulty rate will be revised approximately every two weeks, or after every 2016 block. This means when more and more miners join hashrate of the network, the difficulty of PoW increases, making it harder to find new block rewards. If miners simultaneously stop mining, the difficulty will decrease, helping to balance the network.
Tomorrow's #bitcoin difficulty adjustment (which keeps time between blocks at 10 minutes, regardless of hashrate) will be a massive + 7%! No sign of weakness 2 months before the halving. 🔥 https://t.co/zMdxlteR6Z pic.twitter.com/xtRYcQJgoD
– PlanB (@ 100trillionUSD) March 8, 2020
"The March 10 Bitcoin difficulty adjustment (keeping time between blocks for 10 minutes, including hashrate) is more than 7%! No signs of weak 2 months before the halving.
Bitcoin's Hashrate PoW is the amount of computer power needed to perform a reorg attack or to change the blockchain. Bitcoin Hashrate is currently at 121,637,666 TH. As the hashrate increases and more miners consolidate the network, the Bitcoin price sometimes goes up.
difficulty adjustment appr. + 6.8% today.
I marked the adj. of 5% + (relevant adj.) from 2015.
green = price higher / equal until next relevant Adj.
red = price lower until next relevant adj.a relevant adj. doesn´t lead to higher prices in general but often. pic.twitter.com/wSJXOKfKRz
– ฿ itcoin-Printer (@BitcoinPrinter) March 9, 2020
"The difficulty adjustment increased by 6.8% today.
I have marked the correction since 2015.
Green = price is higher / equal until the next appropriate correction.
Red = lower prices until further corrections are made.
A proper adjustment usually doesn't make the price higher. "
Bitcoin hashrate difficulty increased by nearly 7% on March 9 at 5:50 am. The next difficulty correction will take place as early as March 21 or after each 2016 block. As the difficulty increases, the network becomes harder to attack.
To attack the Bitcoin network, an attacker would have to use more computing power than the thousands of other computers currently mining Bitcoin combined. This does not seem economically feasible as the hashrate increases. Smaller PoW chains with less hashrate are more vulnerable to attack by malicious agents.
Hashrate increase before halving is considered bullish
An example of FUD besieged Bitcoin around halving episodes, fearing that the miner's block rewards would make mining more unfavorable and cause the death spiral of hashrate to decline, as miners surrendered.
This is not really the way it works. Mining is very competitive and successful mining equipment often operates on very thin margins. Instead of causing the death spiral, it often causes smaller, less profitable miners to be absorbed by larger, more efficient companies.
Increased difficulty when the halving is near is usually considered bullish. The cost of producing new BTC increased and reduced the supply of newly minted coins, increasing pressure caused prices to rise.
Miners who take on management responsibilities to maintain operations and post-halving survival will often be more beneficial.
Much of the media hype surrounding halving causes more newcomers to the network, increasing demand for BTC, and also driving up prices.
Although mining as an industry tends to centralize as bigger miners exist and smaller miners die, eventually they still benefit from encouraging more miners, although the rewards are getting less. , but they are more valuable.
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Thuy Ngan
According to Bitcoinist
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