The Chinese mining crackdown earlier this year had a significant impact on the Bitcoin industry and network, causing its mining difficulty and hash rate to plummet. Because China had previously contributed two-thirds of the network’s total hash rate, the miner exodus caused hash rates to remain alarmingly low since then.
The most recent data, however, suggests that a continued increase in Bitcoin’s mining difficulty is now being readjusted. Since 17 July, there has been a continuous increase in difficulty, resulting in a 13.77 percent increase in mining difficulty in two consecutive jumps.
For the first time since the second week of June, the network experienced a 7.3 percent difficulty increase to 15.56 Tera Hash earlier today. A 6-percentage-point increase in difficulty was also observed two weeks ago, marking the first upward adjustment since the crackdown. However, this most recent adjustment is significant because it was the largest in the previous 89 days.
This difficulty increase comes after four consecutive drops, two of which were significant. On 3 July, the network experienced a historic drop of nearly 28%, which was preceded by a drop of nearly 16%.
The mining difficulty of Bitcoin is readjusted every two weeks, or after every 2016 blocks, to maintain the standard 10-minute block time. Prior to the Chinese mining shutdown, Bitcoin’s mining difficulty peaked at 25 T. While miners who stayed on the network made significant gains in the face of decreased competition and hash rate, the recent trend reversal in mining difficulty indicates that competition is also being readjusted.
According to mining data, while China’s contribution to the network’s hash rate has dropped below half, the United States has been quick to pick up the pieces, hosting nearly 17 percent of the global hash rate.
While mining BTC has become significantly less profitable, this recent algorithmic re-adjustment is a positive sign for the Bitcoin community. Hash power is expected to rise in the coming months as miners relocate to more crypto-friendly and energy-efficient neighborhoods.