Data shows that the recent large negative adjustment in Bitcoin mining difficulty has significantly boosted miner earnings.
Bitcoin miners see big increase in revenue after difficulty decreases
According to the latest weekly report from Arcane Research, BTC miner revenue has grown by 15% in the last seven days alone.
A relevant indicator here is the “mining hashrate”, which measures the total amount of computing power connected to the network.
This metric can be seen as a representation of the competition present between miners. Thus, increasing values of the metric imply increasing competition between individual mining machines.
There is a characteristic of the BTC blockhain that the “block production rate” (i.e. the hash rate of new blocks) must aim for a constant value. However, whenever the hashrate changes, the ability of miners to produce blocks also changes.
For example, an increase in hashrate means that more platforms are present on the network now, and therefore the rate of block production accelerates. To counter this, the Bitcoin chain increases what is known as the “mining difficulty“.
Related Reading | Glassnode: What Bitcoin’s Long-Term Holder Cost Basis Tells Us About How Long the Bear Market Will Last
After such an adjustment, miners find it harder to hash transactions and hence their rate is slowed down to the required level.
Now, here is a chart that shows the BTC hashrate trend over the past year:
Looks like the hashrate has gone down recently | Source: Arcane Research's The Weekly Update - Week 29, 2022
As you can see in the chart above, the Bitcoin hashrate is now down 15% from the all-time high recorded in June.
One consequence of this drop was that mining difficulty faced three consecutive adjustments, the last of which was the largest such adjustment in over a year.
Related Reading | Alternative Media Attacks Bitcoin: A Response to “Bitcoin Cannot Free Palestine”
Thanks to the reduced difficulty, BTC miners have observed an increase in their earnings. As recently as last week, daily earnings for miners had fallen below $18 million, the lowest value since November 2020.
The table below shows how the various metrics related to BTC miners have changed over the past week.
The fees per day seems to have fallen by almost 4% during this period | Source: Arcane Research's The Weekly Update - Week 29, 2022
From the chart, it is evident that miners’ earnings have jumped over 15% in the past seven days, from the current $20 million per day.
At the time of writing, the price of Bitcoin is hovering around $21,400, down 10% in the past week.
The value of the crypto has declined during the last few days | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, Arcane Research