Bitcoin Mining Difficulty Drops to Lows Last Seen in Late 2022, Hashrate Dips 7.8%

Three months after the fourth Bitcoin halving, Bitcoin's mining difficulty has dropped to lows last seen in late 2022.

Bitcoin's mining difficulty dropped by 7.8% on June 5, bringing it down to 79.50 terahash per second (TH/s). This marks a significant decrease from the difficulty of 83.6 TH/s on June 4. The last time Bitcoin's mining difficulty was at this level was in March, just before the halving in April.

According to Julio Moreno, the network hashrate experienced a 7.8% drawdown, which is similar to the post-FTX collapse in December 2022. He also noted that miners' daily revenues have decreased from $78 million to $26 million since the halving.

The decline in mining difficulty can be attributed to a lower network hashrate, which has been evident since early May. This decrease is likely due to some miners shutting down their equipment in response to decreased profitability.

Downward adjustments in mining difficulty result in a proportional decrease in the network's hashing power. This can benefit smaller miners and potentially lead to profits for previously unprofitable mining farms.

The drop in Bitcoin mining difficulty comes as the mining sector is undergoing consolidation. On July 2, Iris Energy Limited (NASDAQ:IREN) announced securing $413 million to expand its Bitcoin mining operations. This funding is part of a broader capital raise of $425.3 million, aimed at enhancing data center capacity and scaling mining operations. The expansion plans indicate a bullish outlook for the mining sector, despite the recent drop in mining difficulty.

Prominent Bitcoin advocate Jameson Lopp also highlighted the theft of Bitcoin mining equipment. The rapid depreciation of Bitcoin mining devices is another challenge the mining industry faces.

The challenges faced by Bitcoin miners will be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on Nov. 19.

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