Bitcoin will have its first mining difficulty decrease in over three months. The decrease reflects a lower network-wide hashrate which corresponds to lower mining revenues.
Within the next few hours Bitcoin will experience its first mining difficulty decrease in over 100 days.
Since January, Bitcoin has seen, on average, gradually increasing mining difficulty. These increases are consistent with growing miner revenue — a combination of the 12.5 BTC block reward and transaction fees.
The upcoming decrease in difficulty is observable through a measurable increase in average block time. Mining difficulty adjusts every 2016 blocks. With a 10 minute block time this translates to a difficulty adjustment every two weeks.
That said, when the Bitcoin network hashrate is increasing, as it has over much of Bitcoin’s history (in line with growing prices), it results in block times lower than 10 minutes. Year-to-date the block time has actually averaged around 9.5 minutes.
Since Oct. 27 block time has increased above 10 minutes. This translates to a likely decrease in mining difficulty because miners are not producing enough hashes to find blocks at a more frequent rate.
As seen on the one-year chart (smoothed with a seven-day average) the network hashrate has fallen from 100,000 petahashes on Oct. 26 to 91,800 petahashes on Nov. 5, an 8.2% decrease. The drop should not be surprising. Given Bitcoin’s precipitous price drop since late September miner revenues from block rewards have suffered.
At $8,000 per BTC the block reward would have only amounted to $100,000 versus $125,000 when the cryptocurrency was trading at $10,000. Right now the block reward totals roughly $115,000.
In light of the change in market conditions miners will turn off inefficient hardware. Miners will mothball mining models older than the S9 and reduce hashrate production in areas with higher electricity costs until Bitcoin once again rallies above $10,000.