On June 5, 2024, Bitcoin mining difficulty dropped sharply by 7.8%, the largest drop since the collapse of the FTX exchange in 2022. The adjustment, which lowered the difficulty level to the level before the fourth block reward halving in April, is expected to benefit small miners and mining pools, potentially improving profitability.

Mining difficulty dropped from 83.6 TH/s to 79.5 TH/s

According to Coinwarz, Bitcoin’s mining difficulty dropped from 83.6 terahertz per second (TH/s) to 79.50 TH/s, the level reached in March, just a month before the block reward halving. Terahertz measures how many hashes a mining device, pool, or network can produce per second. The drop in mining difficulty mirrors the drop in network hashrate, suggesting that some miners have shut down their equipment due to low profitability.

The block reward halving in April had a profound impact on miners’ revenues. One analyst noted that daily revenues have dropped from $78 million before the halving to $26 million now. This significant drop has put financial pressure on miners, causing some to cease operations. However, the recent downward adjustment in difficulty may bring relief to those miners who have managed to stay operational.

For those who don’t know, mining difficulty is adjusted every two weeks based on block production rate. This mechanism ensures that blocks are mined at a consistent rate and is adjusted up or down based on the overall network hash rate. The recent adjustment due to low network hash rate reflects the impact of the FTX crash in December 2022.

Miners’ profitability has dropped significantly recently

Julio Moreno, head of research at CryptoQuant, emphasized that miner profitability has been significantly affected recently, highlighting the impact of the decline in mining difficulty. He noted that some miners have shut down equipment in response to reduced profitability, resulting in the current decrease in mining difficulty.

The reduction in difficulty means that small miners now have a higher chance of successfully mining a block and receiving a block reward in BTC. This adjustment may reactivate some mining pools that were previously shut down due to high costs and low profitability. The reduction in competition may provide much-needed relief to miners, especially during the North American summer when operations are often disrupted.

Despite these adjustments, Bitcoin’s price has allowed only a handful of the most efficient mining rigs to remain profitable. This situation suggests that Bitcoin may be near a bottom as miners and other entities continue to face selling pressure that affects market dynamics.

If you don't know how to screen strong coins, I suggest you follow me. Whether it is spot or contract, a little shot may be your limit. The opportunity is short, so you must seize it! Success does not depend on luck. Choice is greater than effort. The circle determines destiny. In the currency circle, in addition to having a keen eye for judging the situation, you must also keep up with a good team and a good leader. If you follow me, you are already halfway to success in the currency circle! Near Junyang + Wei: H98KK5

You can receive the latest free articles in the cryptocurrency world every day. If the articles are good, you can share them with everyone!