Recently, the price of digital currencies led by Bitcoin has fallen sharply, and the entire market is like a bird of fright. Next, we will usher in the third consecutive reduction in the difficulty of Bitcoin mining, and the market is filled with pessimism. The next decrease in Bitcoin mining difficulty will occur within three days, and it is expected to drop from the current 19.93T to 15.83T, a drop of 20.57%.

The difficulty of Bitcoin mining, I believe many people have heard of it, is a measure used to describe the degree of Bitcoin mining. In the Bitcoin protocol, it is stipulated that the current mining difficulty should be adjusted every 2016 blocks, so that the block generation time of each block can be maintained at about 10 minutes. Calculated according to this rule, the cycle for adjusting the difficulty of Bitcoin mining is about 2016*10 minutes (14 days), that is, it is adjusted every two weeks. When it takes more than two weeks to produce 2016 blocks, it means that the current mining difficulty is high, and the mining difficulty will decrease after adjustment. Conversely, when the time taken to produce 2016 blocks is less than two weeks, the difficulty of mining will increase. It is precisely because of this dynamic balance that the number of bitcoins issued tends to be stable. Thanks to the Roast Boy Creators Alliance!

The main factor affecting the adjustment of mining difficulty is computing power, which refers to the number of times a computer can perform hash operations per second, also known as hash rate. As more and more bitcoin miners join in, and mining machines with continuously improved computing power continue to flow into the market, the computing power of bitcoin mining continues to increase, and the time to produce blocks is getting shorter and shorter, so the difficulty of mining It is also constantly improving. At present, the computing power of the entire network has reached 92.44EH/S. The relationship between the specific computing power units can be referred to in the table below.

Bitcoin is designed so that everyone can obtain Bitcoin by providing computing power for mining. It seems to be a very fair digital currency system. However, as the price of Bitcoin continues to rise, the income of mining is also getting higher and higher, and a large number of miners began to pour in. By continuously increasing the number of mining machines and improving the performance of mining machines, they have gradually taken advantage of mining and mastered a large amount of computing power. Of course, computing power and mining difficulty are positively correlated, so mining difficulty also increases geometrically.

Through the chart below, we can clearly see the change trend of Bitcoin mining difficulty. Since 2017, Bitcoin's computing power has begun to increase significantly, and this should be attributed to Bitcoin's second halving. The second halving of Bitcoin occurred on July 10, 2016, and the block reward dropped from 25 to 12.5, which means that miners need to pay twice the computing power to get the same income as before. In order to get more profits, many miners are willing to increase their computing power.

In addition to the impact of halving, the bull market after halving is another important factor for the increase in mining difficulty. After the second halving, the price of Bitcoin broke through the high of 20,000 US dollars at the end of 2017. The miners made a lot of money, and then invested more in Bitcoin mining machines, and the increase in computing power continued. Even when the subsequent market entered a bear market, the computing power remained at a high level.

Of course, there is also a positive correlation between mining difficulty and currency prices. When the market is in a bull market, rising prices make miners more motivated to increase their investment. In the most recent halving bull market, the price of Bitcoin soared from $3,150 to nearly $65,000, and the excess income allowed a large number of miners to enter the market. At the same time, due to the high price, the old mining machines that were originally shut down have also been turned on one after another, and the difficulty of mining has increased significantly.

However, when the market is in a bear market, the currency price continues to fall, and the miners’ income decreases or even loses. Many miners will choose to shut down, resulting in a drop in computing power and a decrease in mining difficulty. This can't help but remind people of last year's 312 market. The sudden sharp drop caused serious losses to miners. More than 40 mainstream bitcoin mining machines reached the "shutdown price", that is, they lost money when they were turned on. Most of the miners chose to shut down, and the mining difficulty once plummeted by 15.95%, and the price of mining machines also dropped by 30% to 50%, which was a veritable mining disaster.

As for the recent decline in mining difficulty, it has a lot to do with the domestic environment. my country used to have more than 70% of the world's computing power, but now due to well-known reasons, miners have to withdraw from the domestic market. A large number of mining machines were shut down in a short period of time, causing a short-term plunge in computing power, and the chain reaction caused short-term currency price pressure.

So will the difficulty of Bitcoin mining continue to decline in the future, or will it return to the upward channel? Let's analyze it from several aspects.

one. Bitcoin has corrected more than 50% from the highest point around 65,000, and it is currently oscillating between 30,000 and 40,000 US dollars, which is a process of bottoming out. At present, the shutdown price of most Bitcoin mining machines is around 7,000 US dollars. According to the current price of 3.3W, miners still have a lot of profit margins, and miners will not choose to shut down. In addition, the continuous high profits of Bitcoin miners have led many large companies to join the mining industry. Even the mining machine manufacturer Canaan recently started to build its own mine in Kazakhstan. From this point of view, the future of Bitcoin The currency computing power will also be greatly improved.

two. At this stage, the domestic shutdown tide is only short-term. After a period of transition, most mining machines will be restarted overseas. This incident will reshuffle the mining industry. Those who have been shuffled are some small miners and mining farms. Large mining farms with capital strength have chosen to find living space overseas. The mining machines of small mines will also be eaten by large mines in this wave, and the computing power will not disappear. When large mines operate overseas, these computing power will recover.

three. On the other hand, after the miners withdraw from the country, the uncertainty of the largest ZC will be eliminated, which will make the Bitcoin computing power more stable, and the development of Bitcoin will be beneficial. The United States and Kazakhstan have become the two most important countries where large domestic mines have landed overseas, and the local government has also extended an olive branch to domestic miners and provided various preferential policies. The Bitcoin mining company that owns the BTC.com mining pool and the corresponding domain name has transferred some of its mining machines to Kazakhstan. Litecoin mining pool founder Jiang Zhuoer is also planning to move his mines to Texas and Tennessee.

Four. During this period of time, the development of Bitcoin ushered in a new milestone. Salvador officially added Bitcoin as the legal tender of the country, becoming the first country to eat crabs. One of the most important reasons for Salvador's recognition of Bitcoin's legal status is that it does not have its own legal tender and relies entirely on the U.S. dollar. And this is the same problem faced by many backward countries. Salvador's currency reform has played a demonstration role, and more countries may join in the future. The joining of these countries is bound to promote the development of Bitcoin, and Bitcoin will usher in a more rapid development stage. In the future, these countries will naturally attract more people to join the mining army, which further promotes the increase in computing power and the difficulty of mining.

In short, although the current market conditions are under pressure, Bitcoin has ushered in many benefits in the international environment, which has also brought confidence to many Bitcoin miners. With the continuous development of Bitcoin and the recovery of market conditions, it is believed that Bitcoin computing power will soon return to the upward channel.