Bitcoin (BTC) miners may see first difficulty increase after long negative streak; what does this mean?
After China’s crackdown on bitcoin (BTC) miners, the network’s hash rate made its most significant correction in absolute numbers ever. Weeks of uncertainty followed with also the difficulty dropping significantly. Now, the situation is improving. Even the difficulty might see a positive adjustment, something we haven’t seen in a while now.
On the 13th of May, the difficulty still increased by 21,5%. Miners flocked to mine crypto after bitcoin experienced some of the best months in its history. But when China started to enforce its crypto mining ban, the mining sector in China collapsed. As a result, the past four difficulty adjustments, which happen about every fortnight, were negative. This streak of negative difficulty adjustments now looks to be broken with an estimated positive adjustment of 4.4% in the coming two days.
The difficulty adjustment is an automatic mechanism built into the Bitcoin protocol that ensures the security and other factors of the network. As Chinese miners turned off their rigs, the network’s computing power decreased, which increased block times. On the other hand, lowering the difficulty made it easier for miners to mine bitcoin, incentivizing more miners to start mining.
Over the past couple of months, mining, therefore, has become easier. And the result is that the hash rate is now increasing again. With that, it is interesting to see the shift that is taking place right now. Chinese miners no longer represent the majority of the network’s computing power, while miners based in the United States increased their share in the network to 17%. This marks an increase of 150% since September last year!
However, it has to be mentioned that the above figures are from April 2021 provided by Cambridge University. In other words, this shift was already taking place before China introduced the ban. It will be interesting to see when new data is published on the distribution of the Bitcoin network. Likely the US will increase its share even further. And with many American miners using green energy, Bitcoin might have become significantly greener these past months.
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