Miners finally breathed a sigh of relief as the difficulty of Bitcoin mining dropped by 15%. Will the 800,000 mining machines that had been shut down be turned on again?

Despite the bear market in the cryptocurrency market for most of 2018, the hash rate and difficulty level of Bitcoin mining have continued to rise, and the cryptocurrency mining industry is feeling tremendous pressure, especially after the recent plunge in cryptocurrency prices.

(Image source: unsplash)

According to data from Blockchain.com, Bitcoin mining difficulty and hashrate both fell by more than 15% in recent days, the second-largest drop in history. The largest drop was in 2011, when the price of bitcoin fell by 18%.

#Bitcoin just experienced the second largest mining difficulty drop in history: -15.1%. Here are the current rankings:

2011-11-01: -18.0%

2018-12-03: -15.1%

2011-10-16: -13.1%

2012-12-27: -11.6%

2011-3-26: -9,5%

2013-1-26: -8.6%

2011-12-01: -8.5%

2012-5-25: -9.2%

— Fernando Ulrich (@fernandoulrich) December 3, 2018

The hash rate is the total computing power of a blockchain network, while the mining difficulty is how easy it is for miners to find new blocks. The main reason behind this trend is the recent plunge in cryptocurrency prices, which has caused miners to shut down their mining machines because they are unable to generate enough profit for continued operations.

The decrease in Bitcoin’s hashrate and difficulty level means that miners are now able to find the next new block more easily and Bitcoin mining is much more profitable than with BCH and BCH SV.

According to F2Pool, the fourth largest BTC mining pool, more than 800,000 mining machines have been shut down since the mid-November crash. Now, miners can re-enter the field with lower difficulty and mine Bitcoin at a lower cost.

Alistair Milne of Bitcoinentrprenuer also commented on the current trend, jokingly pointing out that this is the most "insecure" the Bitcoin network has been in five months in terms of computing power.

However, according to Bloomberg, at least 100,000 miners have stopped production, according to data from Autonomous Research LLP. Fundstrat Global Advisors LLC estimates that about 1.4 million servers have been shut down since the beginning of September.

The downturn has resulted in only a select few miners remaining in the industry: miners with large scale, very specific business models, and extremely low electricity costs. At the same time, the mining industry is also undergoing consolidation, and small miners can no longer support mining operations.

While that’s good for big miners, the merger raises the stakes for investors and others who benefit from the network’s success. With fewer companies controlling mining, it’s increasingly likely that a few could band together to carry out a so-called 51% attack, said Ryan Selkis, co-founder of cryptocurrency research firm Messari. Through this means, controlling miners can reverse transactions and prevent new ones from being confirmed, potentially making billions of dollars from everyone else.

Smaller blockchains such as Bitcoin Gold and ZenCash have already suffered 51% attacks that cost investors millions of dollars, and even if prices recover, such disasters could reduce investor investment in these blockchain networks, hindering their use and growth.

“We note that Bitcoin’s price would need to accelerate significantly before inflows can once again materialize, as has been the case for much of Bitcoin’s history,” according to a Fundstrat report published last week.