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Bitcoin mining difficulty fell by a record 28%. Will this help BTC price recover?

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The difficulty of mining on the Bitcoin network has plummeted, influenced by the decrease in hash rate. The BTC network is experiencing the largest drop in complexity since the network’s launch in 2009 – around 28%. The previous high was set at -18% in October 2011, making it just as easy to add new blocks to the Bitcoin network last time at $ 9,000. The cryptocurrency is currently trading at around $ 35,400.

Over the past two weeks, blocks have been produced on average almost every 13.9 minutes, much more than usual. But on July 1, it took 129 minutes to create the block – the longest since 2011. However, it is worth noting that several factors play a role here, including the natural variance of block time.

Analysts remind that this indicator reflects the ability of miners to mine a block. As the difficulty increases, the mining pools need to increase their power in order to mine the blocks. Accordingly, the hash rate also increases, which has a positive effect on the security of the bitcoin network.

The BTC network updates the mining difficulty level every 2016 blocks, approximately every two weeks. This is to ensure that blocks are generated every ten minutes, despite the fluctuating hash rate. And in this case, the hash rate is definitely not constant. Since the previous adjustment on June 13, Bitcoin’s 7-day hash rate has dropped from 136.47 EH / s to 85 EH / s, down 35%.

Pressure on Bitcoin mining from China

This was largely due to the pressure on Bitcoin mining in China, which caused the hashrate to migrate as miners moved operations to a different location. As a reminder, Alejandro de la Torre, vice president of the Poolin pool, believes that the era of China’s dominance in mining can be considered over. It is this trend that caused the suspension of equipment and a drop in network capacity.

In addition, mining pools began to aggressively sell bitcoins, which led to a collapse in the value of the cryptocurrency.

The BTC.com service predicts a further fall in the indicator by another 28%.

As we can see, the difficulty of mining correlates with the hash rate. So, in May, the computing power of the network of the leading cryptocurrency collapsed by 20% due to power outages in the Chinese province of Sichuan. The hash rate continued to decline in June.

Moreover, the repression against miners in China has also collapsed the Ethereum hash rate.

MicroStrategy CEO Michael Saylor called the government’s prohibition against the industry a “trillion dollar mistake”. He is confident that North American miners will benefit.

What does a drop in mining difficulty mean?

Less difficulty means more profitable BTC mining.

Miners who continue to work are likely to become even more profitable over the coming weeks, unless the price corrects lower or the migrating computing power returns to the network.

And if profitability increases, it makes BTC mining more attractive. As a result of the increased interest in mining, the hashrate can recover and return to its previous level. And accordingly, the price of Bitcoin expected to rise in the near future.

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