Bitcoin difficulty is determined based on the present miner’s processing power. For stable block generation, bitcoin difficulty adjustment is coded in the bitcoin mechanism. Due to China’s crackdown and miners leaving the town bitcoin difficulty will be re-adjusted by July 1 and might show a significant drop.
Bitcoin difficulty is a unit measure of how difficult is to solve mathematical puzzles for a block of bitcoin. For every 2016 block (almost two weeks), the bitcoin difficulty is adjusted. A high difficulty means more processing power and a low difficulty means less processing power. The last two adjustments show a drop of 16% and 5%. Bitcoin difficulty might reach last year’s level by July 1.
Difficulty drops to overcome the computational loss when miners leave the network. If bitcoin difficulty drops by 21.1% then it will be the biggest drop in bitcoin history.
Dylan LeClair, the co-founder of 21stparadigm.com said:
“The Bitcoin difficulty adjustment is now estimated to come in at -21.1 %”.
He further added that how bitcoin miners are struggling for a new hideout after their revenue has been dropped by 64.5% from the peak of May 2021. In the same tweet he added:
“Migrating firms who store reserves in BTC are having to liquidate to cover expenses + miners who are still on are seeing their margins squeezed”.
What if the bitcoin difficulty drops?
You might be wondering what will happen if the bitcoin difficulty drops?. Let me tell you the impact of dropping bitcoin difficulty, bitcoin transaction confirmation will be slower but the miner’s reward will increase.