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A Rare Occurrence of Bitcoin Mining Difficulty Decrease

A Rare Occurrence of Bitcoin Mining Difficulty Decrease

Do you know what Bitcoin mining is? If not, here’s the deal – It is the way that Bitcoin transactions are verified and new coins are produced. Nowadays, this verification is done through miners, also known as ASIC’s (application specific integrated circuits). Miners are dedicated hardware which verify whatever transactions are going on, and the miners are then rewarded with Bitcoin or whatever crypto currency they are mining. When Bitcoin first started, the difficulty was very low, but as Bitcoin gained momentum and more and more people started embracing it, the difficulty kept increasing.
Bitcoin ASIC mining hardware
Early adopters could mine a lot of Bitcoins with just a laptop or a graphics card, but now, unless you have an ASIC, you just don’t stand a chance to generate profit. A whole new industry has surfaced due to the increasing mining difficulty, mining equipment manufacturers and cloud mining. The mining equipment is designed in such a manner that they are dedicated towards cryptocurrency mining and thus, can generate more hashes and thus increasing the revenue of the miner. Hash rate determines the power that the miner spends. With the average hash rate, you would require a lot of time to mine at least one BTC.

The difficulty of mining however, is not constant. How is this difficulty counted? In Bitcoin world difficulty is a measure of how difficult it is to find a hash below a given target, it depends on the amount of computing power used by Bitcoin network miners. Difficulty keeps increasing and (more rarely) decreasing, however, the decrease is almost always negligible. Recently, for the first time in two years, people have seen a decrease in the difficulty of mining. The difficulty has dropped 0.62% from 40,300,030,238 to 40,007,470,271 (it crossed the 40 billion mark in the end of November - current difficulty rate is avaialble here), while the previous decrease occured in the end of 2012. Given the fact that Bitcoin price is not volatile and the number of miners is decreasing, the mining difficulty has gone down. 

The amount of miners has been stagnant as mentioned, and the result would have to be either that the price of Bitcoin would go up, or the difficulty rate would come down, the latter of which has happened. Also, it is worth pointing out that a large number of miners kept the transactions secure, however, at the same time increasing the difficulty. A lot of new gear was made, like the ASIC chips which were dedicated for mining, and as time passed, the older generations of mining hardware was rendered obsolete, as well as the next generation coming in and the electricity prices decreasing.

The decline in the difficulty rate is an advantage to everything related to Bitcoin (except the security of the transactions). Since there is a general decline, we can expect an even lower rate in the coming future in the world of Bitcoin.

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