At the beginning of June, mining difficulty fell by 7.8%. A drop not seen since the collapse of FTX in December 2022.
Many miners have left the sector following the decrease in profitability because of Bitcoin halving.
In April, the Bitcoin sector experienced a critical moment because of Bitcoin halving. Blockchain mining was directly affected, but we’ve recently seen a significant trend change that provides relief top small miners. This shift improves the profitability that was lost because of Bitcoin halving.
Mining difficulty is returning to pre-halving levels. According to Coinwarz data, it had dropped to levels not seen since March, when the fourth halving had yet to occur, and the reward went from 6.25 BTC to 3.125 BTC.
On June 5, the mining difficulty plummeted by 7.8%. It went from 83.6 terahashes per second (TH/s) to 79.50 TH/s. This capacity refers to how hard and time-consuming it is to find the correct hash for each block.
A drop of nearly 10% hasn’t occurred since 2022, which saw the collapse of FTX. This recent decrease in mining difficulty is unusual. As CryptoQuant analyst Julio Moreno notes, it’s the most significant fall in the hash rate since December 2022, which coincides with the collapse of FTX.
A relief after the May panic. Bitcoin mining profitability plummeted after the halving. If daily revenues were previously about $78 million, they’re now about $26 million.
This steep decrease in the difficulty of mining is encouraged just because it’s no longer as profitable. “When profitability dropped, many miners decided to turn off their computers,” Moreno points out.
Fewer miners, less difficulty. Because the hash rate was so high and the profitability so low, many miners decided to stop mining Bitcoin. This steep decline indicates that the pressure is high, and the situation is delicate. Now that there are fewer miners, those who are left will benefit.
Waiting for an improvement in technology so that the Bitcoin can increase. The problem is that although the difficulty has decreased, it’s still remarkably high. Few Bitcoin mining machines are efficient enough to be profitable. For example, the Bitmain S21, with its 3,500 W power consumption, has long been out of stock.
Bitcoin is trading below $60,000. Although experts expect it to rise, situations such as the German government’s seizure and subsequent sale of Bitcoin and the pressure on mining profitability cast much doubt on the sector. The hope is that mining machines will become cheaper and more efficient, and that profitability will improve again.
Image | Kanchanara
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