Bitcoin saw a significant drop of 5.7% last Thursday, marking a major decrease in nearly a year and a half. Data from Bitbo revealed that this adjustment took place at block height 842,688, resulting in a decrease to 83.1 trillion. This shift stands out as the most significant reduction since the lows experienced during the bear market period. For instance, back on December 6, 2022, when there was a 7% drop in difficulty, bitcoin was trading at around $17,000.
Bitcoin’s mining difficulty gauges the level of challenge involved in mining new blocks compared to its minimum difficulty threshold. The system automatically adjusts every 2016 block (approximately two weeks) to ensure an average block discovery time of 10 minutes remains constant, regardless of miner activity levels.
With an increase in miners comes an increase in mining difficulty for Bitcoin; conversely, if there’s a decline in miners competing for new blocks, the protocol adjusts the mining difficulty downward to make it easier for remaining miners to discover blocks more efficiently.
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Recent data indicates a notable drop in the network hash rate following the latest difficulty adjustment on April 24. As of May 8, the average hash rate had decreased from 639.58 EH/s to 578.74 EH/s over the course of seven days. Prior to the adjustment, block times averaged 10 minutes and 36 seconds.
Bitcoin’s hash rate saw a substantial decline, leading to a sharp decrease in its hash price, reaching an all-time low. On April 29, the hash price fell below $50 per PH/s per day ($0.05 per TH/s per day), aligning with bitcoin’s price dipping below $63,000. Currently, Bitcoin is trading at around $61,000.
This downward shift could provide some relief to miners struggling post-halving by making block mining slightly less challenging. The final adjustments before and after the Halving event increased by 4% and 2%, respectively, reaching a peak of 88.1 trillion. The network’s hash rate has dropped by about 11% post-halving.
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The initial increase in difficulty following halving was attributed to the excitement surrounding Runes, a new fungible token standard for Bitcoin introduced during the event. According to Mempool data, after the initial excitement subsided, the average transaction fees decreased significantly, from a peak of $128.45 on halving day to approximately $1.
