Bitcoin Network Difficulty Downward Adjustment a Curse or a Blessing
The Bitcoin mining difficulty determines how tasking it is to mine or generate a Bitcoin block. The Bitcoin mining difficulty is also a measure of the effort required to solve the complex cryptographic puzzle to validate transactions on the Bitcoin network.
When a serious difficulty occurs on the Bitcoin network blockchain, it means that more computing power would be required to mine or generate the same number of blocks.
This great difficulty ensures more security of the BTC network, making it more secure against attacks, especially a 51% attack which is the attack that can ensure effective control of the Bitcoin blockchain network by the entity that carries out the 51% attack.
The adjustment of the difficulty in the Bitcoin mining network is directly related to the total estimate of the mining power estimated in the total Hash Rate (TH/s) chart.
The difficulty of the Bitcoin mining network is usually adjusted after every 2016 block added to the Bitcoin blockchain (this is approximately every two weeks). This adjustment ensures that the average time between each mined block and the next remains 10 minutes.
The Bitcoin mining difficulty is determined directly from data obtained from the confirmed blocks in the Bitcoin network.
The Bitcoin network’s difficulty is normally measured using an internal score that started at 1 (when Satoshi began mining Bitcoin at the easiest level).
The Bitcoin network is programmed and built to increase or decrease depending on the number of miners in the network incrementally.
The Bitcoin network is currently at a score of 14,363,025,673,659, down from the score of 19,932,791,027,262.
Bitcoin miners run the Bitcoin network with nodes all over the world.
Before the last two months, China had the highest number of mining farms, but china particularly has been after Bitcoin miners in the last 6 to 8 weeks.
This has led to a steady reduction in the difficulty level of the Bitcoin mining network with the Chinese government’s ban on Bitcoin mining; in the country, there has been an exodus of miners out of China with the largest number of miners and mining rigs.
This exodus of Bitcoin miners from China opened up new opportunities for new mining farms to emerge outside of China; it has also led to a reduction in concerns of some investors, traders, and Bitcoin enthusiasts alike of the possibility of a 51% attack on the Bitcoin network coming from China considering the sheer number of miners and Bitcoin nodes that were hitherto operating and running from China.
The Bitcoin Network has seen the Fourth consecutive drop Downward in the Difficulty Adjustment:
The Bitcoin network difficulty adjustment has recorded a drop for the fourth time consecutive time during the weekend.
On Sunday, the 18th of July 2021, the difficulty of the Bitcoin mining network dropped by 4.8% at block 691,488; this is coming after the Bitcoin network witnessed a record difficulty drop of 28% on the 3rd of July.
Analysis of the data from BTC.com, a website that tracks activities on the Bitcoin network, the rate of difficulty for mining on the Bitcoin network currently stands at a staggering 18-month low of 13.67 trillion, a level that has not been seen for several years and this low puts the mining difficulty down by 45% from the all-time high(ATH) of 25.05 trillion recorded in May this year 2021.
Data from the Block shows that the Bitcoin mining network recorded four consecutive drops in difficulty last 2011.
Usually, when miners mine blocks and approve/verify transactions on the Bitcoin network, the miners are rewarded with Bitcoins, and the current reward is 6.25 BTC.
The drop in the difficulty level consecutively for the past four adjustments shows that there has been a continued reduction in the computing power applied to the Bitcoin blockchain network.
This reduction in computing power (which are known as nodes at the points of connection to the blockchain) is what leads to the reduction in the difficulty level because the programmed code pushes down the difficulty level to attract more miners, which would increase the computing power of the blockchain and restore the block time to its average time off of 10 minutes.
The time it takes to mine new blocks also increases when there is a drop in the computing power which also means a drop in the difficulty level of the Bitcoin mining network.
On Bitcoin, network blocks are usually added to the Bitcoin blockchain at a regular and predictable rate, ensuring a block is added roughly every 10 minutes or thereabout.
The block time determines the time it will take to create a new block to the Bitcoin blockchain; At the same time, this is sorted, the lace of the creation time can vary, especially when the hash power of the Bitcoin network is reduced or depleted and when there is a drop in the difficulty level of the network.
This variance in block creation time depends on the number of miners online on the Bitcoin network at any given time and the speed of processing of their computers.
With more miners competing to “locate and find” the next block, to earn the current block reward of 6.125 BTC reward, these blocks can be solved and found more quickly as there are more miners online and active on the Bitcoin network; However, when miners go off the network and in the process leave a fewer number of miners to compete to find the next Bitcoin block when this happens then the block time gets slowed down by increasing the time.
The consecutive drop in Bitcoin mining difficulty level has been both a blessing and a curse, in that when the difficulty is reduced, there are fewer miners active on the network, which means these active miners can earn more Bitcoins. However, at the same time, they are online mining, while the seeming curse of it is that the Bitcoin network is less secured, and this is a serious course for concern for many in the industry; this could potentially mean the consistent decline in both hash power and the difficulty level is more of a curse than a blessing in the view of many people.
The reduction in hash power and difficulty level should come back on the rise with news that some of those lost hash power from the Chinese authorities clamp down Bitcoin mining and trading, would soon come back online when the miners begin operation again as some of these miners are said to be moving to the US and others to Kazakhstan to resume operations.