Two of the most important metrics for the overall state of the Bitcoin network have declined recently, including the mining difficulty, which experienced a substantial reduction during the weekend.
This comes amid reports that miners, the backbone of the world’s largest blockchain, continue to be under severe pressure due to the broader market state.
Mining Difficulty Down 10%
Upon creating Bitcoin’s blockchain, the anonymous dev behind it, Satoshi Nakamoto, incorporated a key measure that adjusts every roughly two weeks (2,016 blocks) to make it harder or easier for miners to do their job of maintaining a consistent block creation of approximately 10 minutes. In simpler terms, if there are too many miners, the mechanism increases the difficulty to prevent too-fast block creation, and vice versa.
The latest adjustment took place earlier today. Data from on-chain monitoring sources shows that the difficulty dropped by just over 10%, meaning that there are fewer miners operating on the Bitcoin blockchain. This was the second-largest negative adjustment for the year after the 11.16% drop in early February.
The mining difficulty declined from almost 138T to under 125T. Current data, though still far from the actual adjustment, suggest the next one will be even worse, with projections indicating a 16% drop.
Meanwhile, the Bitcoin hash rate has continued to decline, according to data from Coinwarz. The total combined computational power used by the blockchain to process transactions and mine new blocks, which is measured in hashes per second, is down to under 790 EH/s. Recall that the record was at over 1.2 ZH/s from a year ago.
Bitcoin Hash Rate. Source: Coinwarz
Miners Under Pressure
The declining mining difficulty and hash rate mean that a certain portion of BTC miners have shut off their machines. A recent report indicated that they have felt the pressure from the overall market weakness and reduced revenue.
Analyst Axel Adler Jr. described their current state as a “stress zone,” as evidenced by the Puell Multiple 30-day moving average, which fell 11% in less than two weeks. The raw Puell Multiple is even lower, while the Miner Capitulation metric, tracking the percentage change in BTC’s price since the most recent difficulty bottom, has declined by 21% lately.
