About the difficulty reduction

On the morning of March 26, the difficulty of Bitcoin mining dropped from 16.55T to 13.91T, a decrease of 15.95%, which can be regarded as the second major reduction in difficulty in history.

The largest difficulty reduction was in October 2011, when the difficulty was reduced from 1.47M to 1.2M, an increase of 18.03%. The second largest difficulty reduction was on December 3, 2018, when the difficulty was reduced from 6.65T to 5.65T, an increase of 15.13%.

(The difficulty is lowered below 10%; picture from Weibo @BeatleNews)

The difficulty adjustment is set to ensure that the average speed of mining new Bitcoin blocks is about 10 minutes. When the average speed of Bitcoin block output is higher than 10 minutes, the difficulty will be reduced, and vice versa. In the Bitcoin network, the difficulty is adjusted every 2016 blocks. Calculated based on 1 block every 10 minutes and 6 blocks per hour, the difficulty is adjusted about once every 14 days.

The difficulty is closely related to the computing power of the entire network. The greater the difficulty, the more computing power is required to generate a block. The difficulty is dynamically calculated in the network node according to the rules. The formula is: D=T1/T, where T is the abbreviation of Target and D is the abbreviation of Difficulty. Both T1 and T are 256-bit big numbers, where T1 is a very large constant 2 256−32−1. According to the formula, the smaller T is, the greater the mining difficulty D is.

(The figure shows the 7-day average network data)

According to the data from the Biyin mining pool, before the Bitcoin market fluctuated on March 12, the total network computing power (referring to the sum of the computing power of all mining machines participating in mining in the BTC network) was 115.25E, and the difficulty was 16.55T. As of March 26, the total network computing power had dropped to 94.41E, a decrease of 20.84E.

Similarly, we can also look at the price trend of the currency before the difficulty dropped in December 2018. Similar to this time, the price of the currency experienced a large fluctuation.

(Coin price from November to December 2018)

On the whole, in the next cycle after the difficulty adjustment on March 9, the coin price fell and the computing power of the entire network decreased, which caused the average block time and difficulty setting to be less than 10 minutes, resulting in an increase in the time to mine 2016 blocks. In order to ensure the average block time, the difficulty was significantly reduced this time.

Among them, there was also an incident where no block was produced for 1 hour. For example, on the 12th

This is because Bitcoin block generation is actually the result of a successful hash collision, which is a probabilistic event in itself. There may be a long period of unsuccessful collision (no block), or multiple collisions in a short period of time (extra blocks), and it cannot be identified as a short-term surge or plunge in computing power.

The difficulty adjustment is inversely proportional to the unit revenue, that is, the miner's revenue will increase by approximately the same percentage as the difficulty decreases.

Using the CoinIn mining pool revenue calculator to calculate the revenue under the current and previous cycle difficulty at a coin price of ￥46959 and 4% FPPS, the revenue per T is about ￥0.13 higher (about 15.5%, calculated in fiat currency).

(Calculate the profit based on the difficulty of the 26-day cycle)

(Calculate the profit based on the difficulty of a 9-day cycle)

At the same time, the mining income trend of the Biyin Mining Pool App shows that, compared with the daily income and electricity costs on the 13th and 26th, the S9 has reached the "can be turned on" state when the electricity cost is ￥0.30. In addition, models such as T2T, M21, A920 can also be turned on in the current coin price and difficulty cycle.