[2018-12-03] Bitcoin Mining Difficulty Saw its Second-Largest Drop in History

[Lmaooo]

The crypto market’s prolonged decline has finally begun to manifest in the bitcoin mining industry, which had at times seemed impervious to falling prices but is now experiencing a moderate exodus.

Bitcoin Hash Rate Begins Rare Decline
At a basic level, miners produce Bitcoin blocks by competing to solve complex mathematical problems. When the hash rate increases, blocks are found more quickly, while the converse occurs when the hash rate declines. To maintain a consistent block time of ~10 minutes, Bitcoin automatically adjusts the difficulty of these problems at roughly two-week intervals to account for new machines entering or exiting the network.

For years, the difficulty has almost exclusively increased, as a general price uptrend coupled with rapid advancements in mining technology has resulted in sustained hash rate growth, even during periods of negative market trajectory. However, nearly one year into a bear market that has seen the bitcoin price fall more than $16,000 from its all-time high, that is no longer true.

CCN | https://www.ccn.com/bitcoin-mining-difficulty-just-saw-its-second-largest-drop-in-history/

[InvoKing]

Well, i don't know how relevant this information to have its own news for CCN. I mean its obvious that a drop of the difficulty will occur after this important drop of the price, barely everyone of us predicted it from the beginning..

[Harlot]

This is good news but a lot of people are seeing this as a bad thing. Obviously the price of Bitcoin had a significant role on the decrease of the mining difficulty as other miners are shutting down due to the price of Bitcoin not covering their operation cost. But the drop in difficulty means that it will be much easier to mine Bitcoin back and naturally it would be viable for Miners who shutdown to go back mining again as even though the price of BTC significantly drop chances are their expenses will be covered by how many Bitcoin they have mined more easily.

[Betwrong]

This is good news but a lot of people are seeing this as a bad thing. Obviously the price of Bitcoin had a significant role on the decrease of the mining difficulty as other miners are shutting down due to the price of Bitcoin not covering their operation cost. But the drop in difficulty means that it will be much easier to mine Bitcoin back and naturally it would be viable for Miners who shutdown to go back mining again as even though the price of BTC significantly drop chances are their expenses will be covered by how many Bitcoin they have mined more easily.

No doubt that this is a good news for miners, but I'm afraid we need a bigger drop in difficulty for Bitcoin mining to become profitable with the current price of BTC for those paying $0.12 per KWh. But for those paying $0.07 per KWh or less mining is already profitable and this a good news indeed, especially considering that most likely the price of BTC will rise eventually. 

[KryptoKai]

It is a shift in that way that bitcoins are being mined. It can't be done from a standard company setup, miners have to look at other countries with lower energy costs possibly via renewable fuels. When the miners setup elsewhere the difficulty will rise again

[milewilda]

One thing i do like on whats being written on the article is this:
The Beginning of a ‘Death Spiral’ or a Healthy Development?

and for those people who do always love to tell about the connection of bitcoins price and with its difficulty depleting is already happening.

[BitHodler]

No doubt that this is a good news for miners, but I'm afraid we need a bigger drop in difficulty for Bitcoin mining to become profitable with the current price of BTC for those paying $0.12 per KWh. But for those paying $0.07 per KWh or less mining is already profitable and this a good news indeed, especially considering that most likely the price of BTC will rise eventually.  

Electricity is an important factor, but what people tend to overlook is how high the expenses of the larger farms are when it comes to their employees, the ground and properties they rent, etc.

Even if you're a smaller miner with a relatively higher electricity rate, you can still have it work in your favor with how you don't have much external expenses to focus on, especially if you don't mind mining at a loss.

The larger farms have to cough up the same amount worth of expenses on a monthly basis, and with the price tanking, you have to sell more coins to pay the bills. A 15% lower difficulty adjustment isn't doing much here.

[Betwrong]

No doubt that this is a good news for miners, but I'm afraid we need a bigger drop in difficulty for Bitcoin mining to become profitable with the current price of BTC for those paying $0.12 per KWh. But for those paying $0.07 per KWh or less mining is already profitable and this a good news indeed, especially considering that most likely the price of BTC will rise eventually.  

Electricity is an important factor, but what people tend to overlook is how high the expenses of the larger farms are when it comes to their employees, the ground and properties they rent, etc.

Even if you're a smaller miner with a relatively higher electricity rate, you can still have it work in your favor with how you don't have much external expenses to focus on, especially if you don't mind mining at a loss.

The larger farms have to cough up the same amount worth of expenses on a monthly basis, and with the price tanking, you have to sell more coins to pay the bills. A 15% lower difficulty adjustment isn't doing much here.

I think electricity is the most important factor, and here's why. For a big mining farm with dozens of thousands of miners all the other expenses, like employees' payment and rent, are negligible. In an article on Bitmain's farm in Inner Mongolia, they say that they need 50 employees to watch over eight buildings filled with 25,000 machines.

$600/month considered a good salary in China so I doubt they pay more to those workers.

$600/month x 50 = $30,000/month (to pay employees)

And I bet they pay not more than $3,000/month for the land those eight buildings are located in the Inner Mongolia.

$30,000/month + $3,000/month = $33,000/month (employees + rent)

While, as they say in the same article, their daily electricity bill amounts to $39,000.

Source: https://qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/

[aoluain]

No doubt that this is a good news for miners, but I'm afraid we need a bigger drop in difficulty for Bitcoin mining to become profitable with the current price of BTC for those paying $0.12 per KWh. But for those paying $0.07 per KWh or less mining is already profitable and this a good news indeed, especially considering that most likely the price of BTC will rise eventually.  

Electricity is an important factor, but what people tend to overlook is how high the expenses of the larger farms are when it comes to their employees, the ground and properties they rent, etc.

Even if you're a smaller miner with a relatively higher electricity rate, you can still have it work in your favor with how you don't have much external expenses to focus on, especially if you don't mind mining at a loss.

The larger farms have to cough up the same amount worth of expenses on a monthly basis, and with the price tanking, you have to sell more coins to pay the bills. A 15% lower difficulty adjustment isn't doing much here.

I would imagine that as and if the difficulty level drops further it offers
a chance for small time miners to earn rewards because of lower
operational costs. There are always positives in times like these.

[BitHodler]

@Betwrong.

Bitmain doesn't own all the miners it's running. Most of it belongs to clients that Bitmain on their behalf operates and watches over. In other words, Bitmain isn't all that mighty and big as they appear to be.

Another thing is that some parts in China are going through a rough time which basically lead to the electricity prices to at least double, which significantly affects every large farm due to their size and operational margins.

Of course some miners are more competitive than others, but there is a breaking point for every miner, and the difficulty adjustment to the lower side doesn't happen fast enough to make less profitable miners wait an extra month.