As 2020 kicked off, and there were mere months to go before the big event of the Bitcoin mining reward halving, there would have been not too many who would have bet on a mining difficulty adjustment seeing a drop of 14 percent.
However, the next adjustment to the difficulty is set to drop by that figure thanks to the mining hash rate power that was eased off in the wake of Bitcoin’s big crash alongside the traditional markets.
Bitcoin’s hash rate even registered an all time high early this month, on March 1, as miners drove the hash rate to new heights in anticipation of the reward halving cutting by 50 percent. The market drop was drastic, and the impact quite severe, and this includes the mining ecosystem as this 14 percent drop is expected to be the largest-ever decrease in absolute hashing power.
This decrease in hash rate has caused the Bitcoin blockchain to slow down significantly, with blocks being mined up to 25% more slowly than the 10 minute target. Additionally, and part of the reason for the drop, is that the mining revenue also took a substantial hit.
When mining revenue is at stake, this starts the trigger to lower hash rates, and can lead to quite a rapid drop if there is not some sort of factor to bring the profitability back into the market.
Have we hit the bottom?
While this all seems like bad news in general — especially as the mining difficulty is yet to drop, so is still at an all time high despite the lowered price — there is something positive. In the past, mining difficulty drops as substantial as this have often indicated that the bottom has been reached.
Indeed, Bitcoin has been climbing once again since it bottomed out at $3,800 — and even managed to make as much as 80 percent of its gains back. This climb in price will help the miners, and will also mean that not too much more value will be lost.
Halving still to happen
Even with all this happening in the market, we will see a Bitcoin’s mining reward be cut in half in May — perhaps a little later than expected due to the slower blocks. Many hoped this would have been the catalyst for a massive price spike up to figures of $250,000.
However, the upside is that if this latest difficulty adjustment is indeed the bottom, Bitcoin has a much bigger road to climb after the halving comes into effect.