On Saturday July 3rd, the Bitcoin algorithm was adjusted to take into account the enormous number of Chinese miners who are currently offline.
The mining difficulty level has decreased by 28%. It did so after the difficulty dropped 16% on May 29th and 5% on June 13th.
The decline in difficulties in mining new bitcoins is directly related to China’s crackdown on bitcoin mining this spring. For most of Bitcoin’s existence, between 65% and 74% of global production took place in China.
However, the Chinese government recently started to force miners to cease operations, citing environmental concerns.
See also: Why is Bitcoin mining so energy intensive
Now that the majority of these miners are offline, the Bitcoin algorithm had to adapt.
Why are fewer miners making mining easier?
Fewer miners reduce the difficulty of mining new Bitcoins due to the structure of the Bitcoin program.
Bitcoin, like most cryptocurrencies, works using blockchain technology. Blockchain is essentially a decentralized digital ledger of every transaction that is distributed across every computer on the network.
Every time someone sends Bitcoin to someone else, the majority of computers on the Bitcoin network have to approve the transaction. Approved transactions are added to the blockchain in groups or blocks.
On the Bitcoin network, miners run a computer program that tries to solve a math puzzle; the first computer to do so is allowed to add the latest transaction to the chain and is rewarded with a set number of Bitcoin.
The difficulty of this math puzzle is adjusted based on how many mining machines are on the network to ensure that new blocks can be added in a consistent timeframe – ideally every ten minutes.
After all 2016 blocks have been added (which happens roughly every two weeks), the Bitcoin program adapts to the number of miners.
Miners will also see an increase in profits due to the decreasing competition.
The adjustment is unlikely to be permanent, however, as some Chinese bitcoin miners have already started relocating to more crypto-friendly countries. including the USA
For more news, information and strategies, visit the Crypto Channel.
Comments are closed.