The Bitcoin network is showing signs of strain as mining difficulty plummeted nearly 6% to 83.1 trillion hashes on May 9th, according to data from coinwarz.com. This substantial drop comes from Bitcoin’s third halving event in early May, which slashed block rewards for miners from 6.25 BTC to 3.125 BTC.
Compounding the challenges for miners, Bitcoin’s price has also struggled in recent weeks. After soaring to a new all-time high of $73,737 in April, BTC has since retreated over 18% to trade at $60,700 as of May 10th.
“If there isn’t enough margin for miners to make a profit, they turn off, which causes the hash rate to go down,” explained Nick Hansen, CEO of Luxor Mining Pool. The hash rate, which measures the speed at which miners produce hashes to encrypt data and secure the network, has dipped below 600 exahash per second (EH/s) for the first time since March.
Industry experts attribute the current difficulties to the expected fallout from the halving. “After a Bitcoin halving, the drop in mining rewards leads less efficient miners to unplug their machines,” said Nishant Sharma, founder of BlocksBridge Consulting. “This self-adjusting feature favors leaner operations, as remaining miners receive increased rewards due to the reduced difficulty.”
While the network is under pressure, some see this as a healthy and normal development. Scott Norris, CEO of mining firm Optiminer, stated, “This is a normal occurrence after a halving event and healthy for the network and the well-positioned miners. The miners who planned properly will grow or the ones who turned off will get newer tech and find cheaper energy while everyone waits for the price to reflect the halving.”
As the Bitcoin market continues to digest the impact of the halving and faces near-term price headwinds, the mining landscape is poised for further shifts. However, proponents remain optimistic about the long-term prospects. “Either way, the network will continue to grow,” Norris asserted, adding, “Historically, it’ll be late in the year before we see much price rise [for Bitcoin].”
Learn more: What is Mining Difficulty? A Comprehensive Guide
The sharp drop in mining difficulty underscores the challenges Bitcoin miners face in the wake of the halving and amidst a choppy price environment. As the market continues to evolve, the resilience of the network and the efficiency of mining operations will be put to the test.
