Today, the bitcoin network difficulty took a drop of 9.29% to 13.73 trillion, as per Coinwarz.
This is the fourth downwards adjustment this year after -0.3% in February, -15.9% in March, and -6% in May. Also, the second largest downward adjustment of 2020.
This decline will make mining bitcoin easier as while difficulty was high, more and more hash power was being added to the network, hash rate is currently near 120 Th/s, making it hard to mine BTC.
Post halving, the time to find the block went over 14 minutes, 40% higher than the average 10 minutes, as per Bitinfocharts.
On May 20, the block time dropped under 10 minutes but soon found its way above 10 minutes and had yet to find the balance.
This downwards difficulty adjustment, the second after the halving will help in bringing the block time to 10 minutes. This adjustment took the difficulty back to early January levels but while the price was under $8k at that time, currently we are trading around $9,750.
On March 10, the bitcoin network difficulty reached its all-time high of 16.5 trillion. At that time, BTC/USD was trading around $8,000.
Hash Rate and Price Dance
After the third bitcoin block halving last month, the bitcoin hash rate dropped nearly 50% from the high of 151.9 Th/s on May 11, the day of halving. Since then, the hash rate has been gradually trending upwards.
“Hashrate and price continue their dance: up and down. Sometimes lagging, sometimes not,” stated F2Pool, the China-based second-largest bitcoin mining pool.
After the bitcoin price crashed in March, revenue per Th/s was not sufficient for some miners to remain profitable as such they had to either switch off or move machines.
Unprofitable miners from China, Canada, USA, or Europe, usually end up in locations like Kazakhstan, Russia, the Middle East, and South America, said to Thomas Heller, Global Business Director at F2Pool.
Bitcoin halving further made things worse for miners as the miner inflow got reduced by 50%. But now, the hydro season is coming in China, which occurs from the end of May to the end of October resulting in the “all-in hosting” price to drop to $0.03/kWh from $.055/kWh.
The drop in cost will make mining less expensive, as such “May's hashrate growth matches BTC's move up, despite the post-halving revenue drop.”
Meanwhile, transaction fees, which as a proportion of mining revenue is still significantly higher, are providing some “additional buffer” for miners to keep their older mining rigs online post-halving.
However, over the past week, miners sold more BTC than they generated. The same behavior is seen this week as on June 2nd, the miners sold 9% more BTC than they mined. However, given that miner flow is cut in half, BTC sent to exchanges by miners is low in comparison to pre-halving numbers.
Miner flows to exchange wallets is like x-ray vision for crypto markets.
You know what to do #Bitcoin
— Cole Garner (@ColeGarnerBTC) June 4, 2020
Miners selling might also not really be a bad thing because miners HODL during a weak market as it can’t take the pressure while miners selling indicates the market is well supported.
The miner's rolling inventory (MRI) is still high at 105% today, above 100% means miners are selling more than they mine and below 100 indicates miners are amassing inventory.