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Bitcoin mining difficulty could see record drop over 20% in next adjustment


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Bitcoin's mining difficulty is poised to see its largest drop ever in an upcoming adjustment. Multiple on-chain data sites estimate that the mining difficulty will see a plunge of around 21% in its upcoming adjustment that is set to happen at the block height 689,472. The difficulty and hash rate plunge reflect the magnitude of China’s mining farm shutdown orders this month.

This is not bad or good. This is just how bitcoin is supposed to function. It also reduces energy expenditure.

All Time High Bitcoin GIF by Bitstamp

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Reward is the amount of BTC you get for mining a block. Over time, reward decrease at each halving.

Difficulty is how hard it is to mine a block. The difficulty is set so that, on average, a block is mined every 10 minutes. If a lot of people starts mining, all of a sudden blocks will be mined sooner than 10 minutes on average. So when a new difficulty is set it will be harder to mine a block in order to get the average back to 10 minutes. If a lot of people stop mining, like these days, blocks will be mined on average less than every 10 minutes. When the difficulty readjust, like expected, the difficulty will drop so that the remaining miners can mine every 10 minutes.

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When people are mining they're tying a bunch of numbers together + a "nonce" (aka number used once) and they are attempting to produce a number with a certain number of leading 0's in front.

So you mine like so, assuming looking for number with three zeroes in front.

  • Take inputs of 123, 456, and ABC, + my nonce of 1. Output is 12345.., not a valid
  • Take same inputs as above, but nonce of 2. Output is 012345... Close but still not 3 zeroes in front
  • Take same inputs but nonce of 3. Output is now 00000012345, wooo!

Difficulty is based on how many 0s in front of a randomly generated number. 

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