Since January 2013, we have seen a steady increase in network difficulty, averaging 20%. The biggest jump was in October last year, up 46%. The latest change in difficulty, although small (-0.73%), is the first decrease in this parameter in almost two years. Since January 2013, we have seen a continuous increase in network difficulty, averaging 20%. The biggest jump was in October last year, up 46%. The latest change in difficulty, although small (-0.73%), is the first decrease in this parameter in almost two years. The last degression in difficulty was recorded on January 23rd 2013. In other words, it was 22 months and 56 difficulty changes ago. However, for the past few months, we have seen a clear slowdown in the growth of this value (10% on average since June), so what is the reason for this? If you do not know how the difficulty adjustment mechanism works we remind you: The difficulty of the Bitcoin network is regulated by an algorithm and changes every 2016 blocks. Since the target is to resolve blocks every 10 minutes then the adjustment should fall every 2 weeks. If more people take to digging or new diggers are bought and connected, the processing power of the network increases and the time to dig 2016 blocks decreases below 14 days. If this happens the difficulty is automatically raised so as to adjust the network to parameters consistent with the initial assumptions. Conversely, if the average block solution time is greater than 10 minutes, the difficulty decreases. Analyzing the matter from the economic side (after all, digging has long since become big business), at the current rate and difficulty, bitcoin mining pays off far less than it used to or not at all. The purchase of new diggers at the galloping difficulty level of +20% and the continuous decline in the exchange rate observed for a year, puts a big question mark over the return on such an investment (assuming that the equipment is to dig at least the same amount of BTC for which it was purchased). This in turn translates into a small number of new diggers on the network. Some miners have given up and turned off their miners, because the cost of electricity consumed by them began to exceed the profit from mining, and a few are selling off inefficient equipment and buying new, more energy-efficient miners. Miners from countries with the cheapest electricity and with the most energy-efficient excavators remain on the market. Also the ASIC process used to build excavators has already reached the limit of financial possibilities of excavator manufacturers - the production of chips in the lower process of 14nm and 16nm is still very expensive, of course it's just a matter of time when it will be common and cheap. A lower technology process would increase the efficiency of excavators with lower power consumption, making mining more profitable. The difficulty of the bitcoin network has always been pushing it to the limit and it seems to have reached it at this very moment. Not for the first time. The first such situation occurred in late 2011 and early 2012, when the price of bitcoin fell severely as a result of the bursting of the bubble in June 2011. Now the situation is similar and it is likely that such situations will occur periodically. The whole phase of profitability can be presented as follows: Phase of growth of the exchange rate, and thus the profitability -> continuous increase in the number of new miners and new equipment due to the profitability of mining, and thus a continuous increase in difficulty -> stopping the growth or decline in the exchange rate, and consequently reaching the limit of profitability, because the increase in power is continuous (always where you can earn something there will be people willing to take advantage of this situation) -> Decrease or slowdown in the growth of the network difficulty As you can see, the profitability of digging will increase again with the increase of the exchange rate, so the power of the network will increase again, and with it the difficulty of the network. Even without an increase in the exchange rate, the network power can still increase if: the prices of current miners fall sharply New copters with more power / better efficiency in a lower technological process are released If the price drop continues for a long time and the above two conditions are not met, it's likely that the current drop in difficulty won't be the only one, and copying will become a hobby rather than a form of earning money. Any reproduction, distribution, electronic processing or transmission of content from the bitcoin.pl pages requires the prior consent of the portal. Tags mining bitcoin network difficulty
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