Bitcoin’s Mining Difficulty Sees Second Largest Drop in History

The Bitcoin mining difficulty has today adjusted by approximately -16%, based on data published by Glassnode. This represents the second largest difficulty adjustment in Bitcoin’s 12 year history. 

Bitcoin mining difficulty, in simple terms, indicates how difficult and time consuming it is to find a corresponding hash for any new block on the Bitcoin blockchain. The difficulty itself is typically related to the number of miners active in the network, but there can be other explanations that indicate what might lie ahead in Bitcoin’s future, including what Chinese miners have been up to. 

“Most large scale miners switch off their machines and some even relocate their operations to the Xinjiang region, coming back online a few weeks later. The rest of the network simply takes up the slack and the difficulty adjusts accordingly,” Jason Dane, Bitcoin analyst at Quantum Economics, told Decrypt. 

In addition to Glassnode data, the Bitcoin Difficulty Estimator, which updates every second, places the current Bitcoin mining difficulty at approximately 16 trillion, falling from approximately 19 trillion, representing the approximate -16% adjustment. 

In January 2018—after Bitcoin’s infamous and unprecedented 2017 bull run—Bitcoin saw its greatest mining difficulty adjustment, according to data shown by BTC.com. 

With a history like this, one might assume that a major negative adjustment to mining difficulty indicates a low price or a lack of confidence in Bitcoin. However, according to Deane, this isn’t the case today. 

“This is purely a routine, annual event that just so happens to be in a bullish period for bitcoin, meaning that miners will do very well over the coming 14 day period,” Deane said. 

At the time of writing, the next adjustment is set to occur on November 15, 2020.