Historical difficulty adjustment will make it more profitable to mine Bitcoin starting this Saturday

Key facts:
  • With the new adjustment, the difficulty is placed at levels not seen since June 2020.

  • This year, Bitcoin experienced the greatest period of difficulty in its history.

Bitcoin is experiencing one of the biggest difficulty adjustments in its history, estimated at roughly -28%. This could mean an increase in mining profitability of about 32% in the next two weeks because, with the low difficulty, it will be easier to mine a block, as long as the hash rate current.

According to CoinWarz data, this difficulty adjustment marks a milestone, showing levels not seen since June 2020 when the price of bitcoin hovered around $ 10,000. The difficulty setting is executed in block 689.472, mined in the early hours of this Saturday, July 3.

Historically the Bitcoin network has not undergone major difficulty adjustments above 20%. The largest adjustments have hovered around 16%. The last suffered was last May after the network lived the greatest period of difficulty in its history.

What is Bitcoin mining difficulty

Mining difficulty is a cryptographic value that establishes how difficult it can be to mine a block. This in turn relates to the hash rate or mining power. The greater hash rate, the greater the difficulty, and vice versa. This value is used to keep the average mining time per block around 10 minutes. Currently the difficulty is 1.993 billion (the difficulty is a number, it has no unity).

This value is adjusted in periods of 2,016 blocks, which occurs approximately every two weeks. Adjustments are made based on the average time it takes to mine blocks. If, for example, blocks are mining very fast, averaging less than 10 minutes, the difficulty will increase when the corresponding period is completed.

For the next difficulty adjustment, the difficulty is estimated to go from 19 billion to 14 billion. Source: Coins Warz.

The adjustment is made with respect to the time it takes for the blocks to be mined. If a block takes more than 10 minutes to mine the difficulty decreases, if less, it increases. In that sense, this July 1 was a historic event knowing the block with the longest waiting time to be mined within the Bitcoin network, with a waiting time of 2 hours and 19 minutes.

How profitable it will be to mine bitcoin starting Saturday, July 3

When the -28% adjustment for the next period of difficulty becomes effective, and based on the hash rate current owning Bitcoin network, miners of the mother cryptocurrency they will enjoy an increase in profitability of up to 30%, according to Whattomine data. These levels of profitability have not been observed since June last year.

Estimated profitability of an S19 pro miner which has a mining power of 95 TH / s.Source Whattomine.

As shown by the profitability calculator of Whattomine, an individual miner, as is the case of the S19 pro of Antminer, which offers a hash rate of 95 TH / s, would be offering, in the two weeks that lasts the period of difficulty, an approximate net return of 0.00752 BTC equivalent to USD 230.

The length of this period will depend heavily on the migration of miners from China, that seems to be the main cause of the fall of the hash rate in bitcoin. It will also depend on how long it takes miners to settle in other countries, taking into account that this difficulty adjustment would last until approximately Saturday, July 17.

Zack Voell, Bitcoin writer and researcher, stand out in a Twitter thread, that miners are migrating to countries near China ,however”the relocation process of ASICs will be longer than most people expect”. Likewise, he maintains that the most benefited, within this fall, will be the miners who are still online.

As reported by CriptoNoticias, mining pools such as BTC.com, would be established in countries neighboring China as is the case of Kazakhstan.

China and the veto on Bitcoin miners

China has stepped up its measures against Bitcoin miners. This has caused dramatic falls in the hash rate bitcoin, because, according to data from the University of Cambridge, by the month of April China owned 65% of the hash rate bitcoin world. These data have not been updated for more than a year.

Yunnan province owned 5% of the hash rate bitcoin world. Source: Coin Warz.

China’s anti-mining policies, whether motivated by environmental issues, or as a scenario for the launch of the Digital Yuan, seem to continue to rise.

Yunnan, one of the last provinces to ban mining within Chinese territory, Crypto News reported possessed about 5% of the global mining power of the entire Bitcoin network.

Before the news of the prohibitions in this province was known, the hash rate he had shown slight signs of recovery reaching over 150 HD / s. Two weeks after the ban, the hash rate it is now over 69 HD / s, which means a reduction of more than 50%.

The hash rate of Bitcoin has fallen to 2019 levels near 68 EH / s.Source: Coin Warz.

Bitcoin: price, hash rate and difficulty.

The difficulty and the hash rate of Bitcoin, as has already been said in this text, are values that are intrinsically linked. The greater hash rate, greater difficulty. However, while the price of BTC is out of the equation, it seems to behave, at times, on a par with the movements of these two values.

May 29 difficulty adjustment, after reduction hash rate on May 13, it was 16%. Source: Coin warz.

Before having the greatest period of difficulty in the Bitcoin network, the hash rate it reached an all-time high at 191 PH / s. During this bullish cycle in mining power, the first news came out that China would begin to tighten its ban on Bitcoin mining.

As China began its attack on Bitcoin, 2 events occurred almost in parallel: beginning of the greatest period of difficulty in the Bitcoin network and fall 24% of the hash rate between May 13 and 19 reaching 137 PH / s. This produced a serious congestion of the network due to the most difficult period in the history of Bitcoin.

With the fall on May 12 of almost 50% in the value of Bitcoin, added to the period of difficulty suffered by the network, mining profitability was seriously affected. Source: TradingView.

The fall of last May 12 of the price of Bitcoin, coincided with the fall of 24% of the hash rate. Subsequently, at the end of the difficult period at the end of May, the network underwent one of the biggest adjustments in 2021 of about 16%. The beginning of the new period coincided with a 15% increase in the price of BTC.

Currently, while BTC would be suffering one of the biggest drops in its hash rates, added to the biggest decline in difficulty in history, the price seems to remain lateralizing in a range between $ 30,000 and $ 34,000.

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