Yesterday there was the second most significant decline in mining difficulty in Bitcoin’s history.
In fact, it suddenly went from 19.99T to 16.78T, a decrease of 16%.
The mining difficulty of Bitcoin is updated about once every two weeks, and in the previous weeks, it had always been increasing.
By mid-September, it was around 17T, but by the end of September, it had already surpassed 19T, reaching almost 20T in mid-October.
However, a sharp drop in hashrate last week had significantly increased block time, the average time needed to validate a block from 10 minutes to over 14 minutes, resulting in a significant increase in transaction costs.
As a result, a drop in difficulty to reduce block time was expected yesterday, but few had predicted that it would be the second-largest ever.
The decline in Bitcoin’s difficulty over the years
The absolute record was set in October 2011, when the drop was 18%. Yesterday’s record, at -16%, was the second most significant single decline in Bitcoin’s difficulty ever.
Today, in fact, the block time is back below 10 minutes, and this over the next few days should also bring down transaction costs, while the many still waiting in the mempool are confirmed.
It must be said, however, that the current level of difficulty is higher than in early July this year, i.e. significantly higher than in the first half of 2020 and all previous years.
This is due to the fact that the hashrate actually remains very high, despite last week’s sharp decline. It is enough to mention, for example, that it is still higher than in the days following the halving of May 11th of this year.
Finally, it must be stressed that these dynamics, which are mainly important for miners, do not affect the price, as this is determined exclusively by the relationship between supply and demand on the markets, which are hardly influenced by such technical issues, which are only of interest to miners and, indirectly, to those who carry out transactions, because of the variation in transaction costs.