Recently, the continued decline in the cryptocurrency market has finally begun to manifest itself in the bitcoin mining industry. It seems that the mining industry, which is not affected by the price decline, is experiencing a “fleeing”.

Bitcoin hash rate is rarely falling

At a basic level, miners compete to solve complex mathematical problems by competing to produce bitcoin blocks. When the hash rate increases, the block can be dug up faster; when the hash rate drops, the opposite happens. In order to maintain a block time of about 10 minutes, Bitcoin automatically adjusts the difficulty of mining every two weeks, to automatically adjust the miner's join or exit.

Over the years, the difficulty of mining has almost always increased, for the simple reason that the overall price of bitcoin is on the rise, coupled with the rapid development of mining technology, resulting in a sustained increase in the hash rate, even during periods of negative trajectory in this way. However, the bear market in recent years has caused bitcoin prices to fall by more than $16,000 from historical highs, and the continued negative market has broken this balance.

As shown, the bitcoin hash rate has been declining since mid-October. Because the decline in bitcoin prices has accelerated the rate at which old mines have been eliminated, many mines have entered a shutdown state to avoid losing money. According to the survey, the average cost of mining a bitcoin in a small mine is around $4,500, and since November 20, bitcoin prices have been lower than the expected cost.

The miner’s escape began to appear in the difficulty of bitcoin mining The miner’s escape began to appear in the difficulty of bitcoin mining

On December 3, 2018, the 275th bitcoin mining cycle began at 552,384 blocks with a new difficulty of 5,646,403,851,534 (-15.13%). According to the data chart compiled by XDEX chief analyst Ulizi, this is the second largest mining difficulty in Bitcoin's ten-year history. Bitcoin's largest mining difficulty was reduced to -18%, as early as November 1, 2011.

The ranking of bitcoin mining difficulty is as follows:

November 1, 2011: -18.0%
December 3, 2018: -15.1%
October 16, 2011: -13.1%
December 27, 2012: -11.6%
March 26, 2011: -9. 5%
May 25, 2012: -9.2%
January 26, 2013: -8.6%
December 1, 2011: -8.5%

One point to add is that on November 18 this year, the difficulty of bitcoin mining was down by 7.3%, which is a big adjustment in itself, and on December 3 after half a month, it experienced a sharp downward revision, indicating bitcoin mining. The industry is experiencing unprecedented changes.

At present, the bitcoin hash rate is 37.7 EH / s, which is 39% lower than the 61.9 EH / s at the end of August and about 31% lower than the weekly average peak set on October 1.

The Death Spiral stage is open?

On December 3, Professor Otto Sarin, a professor of finance at Santa Clara University, published a paper on bearish bitcoin. He believes that the recent decline in mining difficulty indicates that the bitcoin market has entered the “death spiral” stage. Bitcoin prices are already lower than mining costs, which will drive miners out of the market. As the cost of mining decreases, the price of Bitcoin will also fall. In addition, a large number of investors are short selling Bitcoin in the futures market, which will aggravate the fall of Bitcoin. (Source: Nuclear Finance)