Bitcoin Mining Difficulty Set for Second Biggest Drop Since FTX Collapse

Bitcoin
miners’
resilience
is
being
tested
as
the
network’s
halving
takes
a
bite
out
of
their
bottom
lines.

Inefficient
miners
are
switching
off
after
the
reward
for
new
blocks
was
cut
in
half
from
6.25
BTC
to
3.125
BTC
on
April
19,
which
has
pushed
the
hash
price
for
mining
towards
a
four-year
low,
reaching
$0.04
per
terahashes
per
second
(TH/s)
per
day
on
July
4.

Miners
are
also
preparing
for
a
5%
drop
in
Bitcoin’s
mining
difficulty
–
how
hard
it
is
for
a
miner
to
create
a
new
block
–
which
is
the
second
largest
drop
since
the
FTX
collapse
in
2022.
On
that
occasion,
7%
was
wiped
off
Bitcoin’s
mining
layer
as
the
SBF-induced
cataclysm
shook
every
corner
of
the
industry.

“The
6%
difficulty
drop
is
an
economically
rational
reaction
by
global
miners
to
the
hash
price
we’re
seeing,”
said
Taras
Kulyk,
founder
&
CEO
of
SunnySide
Digital,
a
data
center
provider
for
the
Bitcoin
mining
industry.

“This
is
not
pain
for
a
majority
of
the
miners,
but
a
reprieve
from
the
rapid
hash
rate
gains
we’ve
been
seeing,”
he
told
The
Defiant.

Kulyk’s
voice
echoed
that
of
Anthony
Power,
co-founder
of
Power
Mining
Analysis.

“The
drop
in
both
difficulty
and
hashpower
will
actually
be
good
news
for
the
North
American
Bitcoin
miners
who
have
the
most
efficient
mining
fleets
and
low-cost
energy,”
Power
said,
adding
that
“they
will
effectively
be
able
to
achieve
higher
BTC
production.”

Halving
Strains
Network

Bitcoin
mining
is
an
energy-intensive
process
where
specialized
computers
known
as
ASICs
compete
to
find
a
random
number
within
an
astronomical
range
of
numbers.
Every
ten
minutes
on
average,
a
miner
finds
the
number
and
receives
a
reward
in
BTC
–
which
in
turn
secures
the
network.

According
to
protocol
rules,
every
four
years
or
210,000
blocks,
the
network
cuts
the
block
rewards
by
half.
This
reduction
aims
to
reduce
the
rate
at
which
new
bitcoin
is
generated,
thus
putting
a
limit
on
the
supply
of
new
BTC
entering
the
ecosystem.

The
event
is
usually
accompanied
by
a
large
exodus
of
miners.

Large
Miners
Are
Focused
On
Operational
Efficiency

According
to
Kulyk,
his
team
has
observed
that
larger-scale
digital
miners
have
been
focusing
on
operational
efficiency
gains
over
the
last
2
months
vs
scaling
up
hardware
purchases.

“Once
the
bitcoin
price
shows
a
renewed
price
appreciation
momentum,
we’ll
likely
see
those
waiting
on
the
sidelines
continue
to
snap
up
new
generation
hardware
to
continue
the
refresh
cycle
of
older
generation
hardware,”
he
said.