As BTC promoters continue peddling nonsense that the digital currency will soon “moon” after the halving, digital currency processors are already abandoning ship. Network hash rate has plummeted 45% since the record-breaking levels it saw on February 29. The decrease in computational power has now caused the second-largest percentage drop in the network’s history in mining difficulty (a measure telling us how hard it is to compete for mining rewards) erasing all gains made since mid-January.
The fall in mining difficulty seems far from over. Mining pool BTC.com estimates that the next adjustment would see the difficulty go down by another 14.56%. Why have some digital processors bowed out of supporting the BTC blockchain?
The current price of BTC has made mining far less profitable. Earlier this month, the digital currency suffered its worst sell-off in seven years, and it has only partially rebounded since. Now, the blockchain network adjusted its mining difficulty around 3:00 UTC on March 26 to 13.91 trillion (T), down from its 16.55 T all-time high in the previously recorded cycle. This drop mirrors the hash rate, which touched an all-time high of 136 exahash per second (EH/s) but has since dropped to 75 EH/s.
The drop in complexity was inevitable in the face of the sizable number of nodes no longer competing to solve math problems to win the block subsidy reward.
The most significant difficulty percentage drop in Bitcoin history was 18.03% dates back to October 2011. Bitcoin’s mining difficulty is programmed to recalculate itself every 2,016 blocks to keep the average block production interval at about 10 minutes. This typically takes about 14 days. When numerous rigs switch off during a 14-day cycle, it increases the time for remaining processors to produce the 2,016 blocks. In reaction, the Bitcoin network makes it less difficult to process in the next cycle.
Those nodes departing the network are most likely small miner succumbing to the pressure of operating at a loss or those previously running older ASIC models, such as the widely used Antminer S9. According to the China-based firm Poolin, the popular S9 would have been operating at a loss during this latest market collapse. Once the halving occurs, use the S9 will become economical impossible since the break-even cost to mine a block on the BTC network is expected to average around $12,000 make this device impractical to operate.
While the BTC network seems to be on the decline, the Bitcoin BSV blockchain has seen renewed interest and continued growth with new transaction processors coming on board weekly, the more profitable public blockchain. Recently, the hash rate on Bitcoin SV rose from 675 PH/s to 1535 PH/s over nine days.
As experts in the field have warned, hopping between chains is a viable profit play, but only in the short-term. Increasing transaction volume is the only viable permanent solution to sustainable profits for digital currency transaction processors. With the block reward halving approaching, Bitcoin SV’s network is the only protocol capable of supporting transaction processors (miners) as they evolve into supporting enterprises using the blockchain.
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