Bitcoin recorded a 6% negative adjustment in mining difficulty this week, ensuring that the cryptocurrency continues to contain mining blocks every ten minutes.
This suggests that the number of miners vying for transaction validation is rapidly declining in the cryptocurrency, suggesting that the effects of the recent mining reward halving event are gradually coming to grips with the cryptocurrency.
The recent adjustment to the mining difficulties coincided with a significant drop in the hash rate of the benchmark cryptocurrency, which has continued to decline in the weeks since the mining rewards were halved.
However, it is important to note that Bitcoin was able to avoid the “Bergmann death spiral” predicted by some analysts.
Bitcoin sees a falling hash rate when smaller miners turn off their rigs
Bitcoin's hash rate has dropped significantly lately.
Looking at the chart below, the hash rate hit a new all-time high just before halving the block rewards earlier this month.
This was probably the result of miners upgrading their equipment to counter the reduced profitability caused by the event.
However, in the period since its inception, the hash rate of the cryptocurrency has dropped and has just hit new lows for 2020 as it goes into an intense downtrend.
It appears that this decline has been mitigated by the massive transaction fees miners have been charging recently, which has reduced the sting resulting from the reduced block rewards.
Arcane Research has outlined this possibility in a current report, Saying:
"Some of the reasons why many miners have stayed are probably related to the recent increase in fees that cover part of the miner's reward loss."
A drop in the hash rate was not unexpected, as many analysts had previously thought about the possibility that this would result in the miners surrendering massly if their profitability declined.
BTC avoids "spiral of death" when mining difficulties decrease
The aforementioned 6% drop in mining difficulties at Bitcoin has made it easier for miners who have kept their oil rigs up and running to validate transactions.
Arcane Research also spoke about it, stating that this is the direct result of BTC's reduced mining profitability after halving.
"This week, the level of difficulty for Bitcoin dropped 6%. This indicates that fewer miners are fighting to solve the puzzle to get the freshly minted Bitcoin as it became less profitable after halving."
It is also important that this adjustment is far from a "death spiral" that many predicted.
“However, some expected a much larger decline and that this would be the end for a large group of miners. This has not happened, and the adjustment was not one of the greatest we have seen in the past. "
The largest Bitcoin mining difficulty adjustment ever observed was 18.03% and occurred on October 31, 2011.
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