Bitcoin Mining Difficulty Records Largest Ever Downward Adjustment of 28% Following the Miner Capitulation
Bitcoin mining difficulty has recorded its largest-ever downward adjustment of 28% to about 14 trillion, last seen in June 2020.
This big drop in difficulty adjustment was to be expected given that the hash rate of the leading network fell to August 2019 levels at about 58 Th/s. As of writing, the hash rate has recovered to above 92 Th/s, down from an all-time high of about 171.4 Th/s in mid-May.
Bitcoin network’s hash rate took a hit after China increased its crackdown efforts on cryptocurrency trading and mining in the country. With the majority of the mining farms shut down in China and now moving overseas, the worst for the hash rate seems to be over with the recovery phase ahead of it.
Today is the political version of “miners capitulation”, selflessly brought to you at much sacrifice by China.
Miner’s capitulation has historically been a good bottom indicator. https://t.co/UDoFHZh9vz
— Willy Woo (@woonomic) July 3, 2021
Galaxy Digital’s Mike Novogratz, who was previously a hedge fund manager at Fortress Investments and a partner at Goldman Sachs in an interview with Bloomberg this week, said the miners moving out of China is a “big net positive” for the ecosystem.
Most importantly, China’s politically sensitive ruling communist party’s 100th anniversary is now behind us, which has been driving the crackdown on crypto and other industries.
The price of Bitcoin and cryptocurrencies was just as affected by this crackdown which triggered a sell-off in the market. Today, BTC is moving back towards $35k. He said,
“So I saw these last three weeks as an amazing test and an amazing successful test for the whole crypto ecosystem.”
Talking about the recent 50% to 75% retracement in the crypto sector, Novogratz said all of this happened without a plunge protection team, and lawsuits like in traditional finance, and the system worked how it was supposed to.
Wisdom by Don here. This more about being smart.
Onchain activity is a ghost town… need to see something worthwhile before jumping back in, otherwise it’s too risky. https://t.co/ODkjiTepPG
— Ben Lilly (@MrBenLilly) July 2, 2021
The latest negative adjustment would now help bring down the block time, which went to 25 minutes earlier this week and is currently at 15 minutes 30 seconds, up from the typical 10 minutes.
Average fees on the largest network are already seeing the effect of this adjustment, falling to $6 compared to $10 yesterday. Back in April, around the peak of Bitcoin price, the average fees soared to nearly $63, surpassing 2017’s $55.
The crypto market participants are now hopeful that this would have transactions picking up again, which fell to late 2015 levels.
On June 27th, the number of transactions on the bitcoin blockchain per day was 118.6k, which is now recording 213,839, according to Bitinfocharts. Interestingly, daily transactions have been on a downtrend throughout this year.