On November 3, Bitcoin experienced its first and biggest negative mining difficulty adjustment in close to 10 years as its network flawlessly took care of itself.
Data from BTC.com which is a monitoring resource shows that the Bitcoin difficulty automatically readjusted itself by 16% on Tuesday.
Bitcoin’s Difficulty Adjustment
Difficulty is a measure of how hard it is to mine a Bitcoin block. A high difficulty means that it will require more computing power to mine the same number of blocks, which makes the network more secure against attacks. The difficulty adjustment is directly related to the total estimated mining power in the total harsh rate chart. The hash rate shows a look into the amount of computing power dedicated to Bitcoin transaction validation.
Previous estimates of the difficulty suggested that the adjustment would be around 13% but this was the second highest in Bitcoin’s history. The highest took place in 2011 where there was an 18% adjustment which also came at the end of October.
The difficulty is adjusted every 2016 blocks, or approximately two weeks such that the average time between each block remains 10 minutes. The difficulty is gotten directly from the confirmed blocks data in the Bitcoin network.
The reduction in adjustment incentivizes more mining participants to compete for block subsidiary rewards and with this, the difficulty begins to rise again.
However, estimate have put the next adjustment at another -16%, showing that the effect of Tuesday’s event had not been felt yet.
The downward adjustment will decrease transaction fees and the block time for users as well as reduce the size of unmined transactions in Bitcoin’s mempool. Earn.com has showed estimates that the optimal Bitcoin transaction fee will stay high at 80,000 Satoshis ($11).
BTC Price Unaffected by Difficulty
Industry commentators were only a little fazed by the big negative difficulty adjustment, and they praised Satoshi’s design of protecting the network funds and integrity.
In a tweet, Travis Kling, founder of asset manager Ikigai, said that there is no aspect of Bitcoin more beautiful than the difficulty adjustment and called it a flat out gorgeous mechanism design.
There is no more beautiful aspect of #Bitcoin than the difficulty adjustment. Just flat out gorgeous mechanism design.
— Travis Kling (@Travis_Kling) November 3, 2020
Bitcoin’s network hash rate was seen to be taking a u-turn on its own descent on Tuesday and the estimated weekly average values were taking an uphill trend.
A few week ago, the hash rate metric was at an all-time high, but lost around 25% in the second half of October.
The difficulty adjustment has not impacted the price of BTC in a noticeable way, as the price is above $13700.
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