Bitcoin Marked the New Year with Slight Decline; Mining Difficulty for the First Time Since October

Last Modified:17 Mar 2021 20:02:25
Bitcoin Marked the New Year with Slight Decline; Mining Difficulty for the First Time Since October

The statistical data from Blockchain and Bitcoin Wisdom websites confirm that most recent difficulty of Bitcoin network has increased over 10 percent.

The process of difficulty is one of the best and smartest parts of the Bitcoin network (a type of Blockchain and cryptocurrency). Network difficulty refers to the time a miner needs to mine a block of transactions in Blockchain and start the next block for mining. The blockchain is an encrypted data structure.

Mining difficulty has increased for the first time since early October indicating that miners have deployed a larger hash power into the network. After a sharp 31.5 percent decline in the last quarter of this year, Bitcoin mining difficulty rose about 3 percent in the last week. As Hacked reported last month, there doesn’t seem to be a comparable drop in mining difficulty over the years, which reflects the severity of the recent bear market trend.

A bear market is a market wherein stocks declining trend and recession is the order of the day in the financial market. There is a negative atmosphere in this type of market, the supply increases, and the demand decreases. Therefore, trading volume lowers, and the market falls into recession and lethargy. Risk of loss is very high in the bear market, as prices lose their value constantly; but keep in mind that a price drop over a day or a week is not the sign of bear market. In this regard, one should not have a short-term perspective and should investigate the issue in the long run.

According to Bitcoinist, since July, along with the decrease in Bitcoin price, it has experienced repeated downward adjustments, and miners need lower costs to avoid incurring the network loss.

Miners work toward providing security and also confirming Bitcoin transactions.

In the current year, five downward adjustments have appeared for Bitcoin – once in July, once in October, once in November, and twice in December. These numbers are unprecedented over the past seven years.

The largest shift was 15.1 percent, on December 3, when Bitcoin had a 0.07 percent drop in the U.S. Dollar with the value of $3834.91 in BTC/USD. During this time Bitcoin was in a tough spot; at the same time miners, fearing profitability, were leaving this network.

Bitcoin figures completely dismissed claims implying trouble in Bitcoin; Alistair Milne, the British investor, and entrepreneur called these claims narrow-minded after publishing the fresh hash rate data in social media on December 31.

Hash rate is the completion speed of computing operation in the Bitcoin code. The higher hash rate during mining, the better; since there would be more time for the next block and receiving a reward. Mining cryptocurrencies include finding blocks through complex computations. In fact, the hash rate is the speed at which mining hardware operates.

Bitcoin hash rate has declined since August, But the decrease in difficulty around mid-December brought along a U-turn process. This, to some, demonstrates the power of Bitcoin so that they consider it without a central authority. Currently, few commentators expect a breakout in Bitcoin in the short term; but technical condition continues well to constitute a reason for celebration.

Lightning Network, Bitcoin’s holistic and scalable solution, has hit new records for capacity and participation in the last month. The Lightning Network is a second layer payment protocol that operates on top of a cryptocurrency.

Also, Jimmy Song, a Bitcoin developer, described the decentralized nature of Bitcoin in a blog post on Monday as something that can increase its separation from other Bitcoin alternatives, altcoin, in 2019.

Bitcoin alternate currencies or altcoins are digital currencies that were released after Bitcoin and introduced themselves as better alternatives for Bitcoin. These digital currencies were made within the fundamental framework of Bitcoin, and most of them were quite similar.

In the last quarter of 2018, a sudden drop in the price of Bitcoin, which made a lot of people move away from the world of digital currency, was accompanied with a decrease in Bitcoin mining difficulty. The shared market of digital currencies experienced a decrease of about $100.4 billion before improving in the second half of December. In this process, millions of Bitcoin miners ceased their activities.