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Three months after the fourth Bitcoin halving, Bitcoin's mining difficulty has dropped to lows last seen in late 2022.
What Happened: Bitcoin's mining difficulty dropped by 7.8% over the weekend, a reduction reminiscent of the decline seen after the FTX collapse in 2022, according to CoinDesk.
Data from Coinwarz indicates that Bitcoin's mining difficulty fell from 83.6 terahash per second (TH/s) to 79.50 TH/s on June 5. This level was last observed in March, just before the halving in April.
CryptoQuant's head of research, Julio Moreno, noted that the network hashrate experienced a 7.8% drawdown, similar to the post-FTX collapse in December 2022. He mentioned that miners' daily revenues have decreased from $78 million to $26 million since the halving.
Moreno added that the decline in mining difficulty has been ongoing since early May due to a lower network hashrate. This is attributed to some miners shutting down their equipment in response to decreased profitability.
Downward adjustments in mining difficulty result in a proportional decrease in the network's hashing power. This can benefit smaller miners and potentially lead to profits for previously unprofitable mining farms.
Miners were a major source of Bitcoin selling pressure in June, liquidating over $1 billion worth of BTC in two weeks. This selling pressure kept Bitcoin in a range between $65,000 and $70,000.
Why It Matters: The drop in Bitcoin mining difficulty comes as the mining sector is undergoing consolidation.
On July 2, Iris Energy Limited (NASDAQ:IREN) announced securing $413 million to expand its Bitcoin mining operations. This funding is part of a broader capital raise of $425.3 million, aimed at enhancing data center capacity and scaling mining operations. The expansion plans indicate a bullish outlook for the mining sector, despite the recent drop in mining difficulty.
Jameson Lopp, a prominent Bitcoin advocate, also highlighted the theft of Bitcoin mining equipment. The rapid depreciation of Bitcoin mining devices is another challenge the mining industry faces.
What’s Next: The challenges faced by Bitcoin miners are expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image created using artificial intelligence with Midjourney.
