Is a Bitcoin ‘death spiral’ imminent following yesterday’s massive difficulty adjustment?
Is a Bitcoin 'death spiral' imminent post-obit yesterday'south massive difficulty adjustment?
Bitcoin experienced ii massive mining difficulty adjustments recently. Is this something to be concerned about?
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Before the recent halving, many were prophesying a so-called "death screw" for Bitcoin. This theory hinges on the idea that the halving of the block reward leads to an exodus of miners due to the sudden unprofitability of mining activities. As a effect, the network hashrate decreases and the block time increases, meaning that miner revenue further diminishes, pushing more miners off the network. This loop would then allegedly keep until there is no one left to mine Bitcoin (BTC).
Bitcoin mining difficulty. Source: Glassnode .
On September 20, Bitcoin experienced ane of the biggest upwards mining difficulty adjustments in its history. In fact, information technology is the second major upward adjustment since the halving. So, were the doomsday prophets right all along?
Bitcoin hashrate and block fourth dimension (14-day boilerplate). Source: Glassnode .
In order to answer this question, we have to sympathize what triggers difficulty adjustments. All Bitcoin miners compete to solve the next block. The more than hashpower the network enjoys, the faster that can happen. In order to make sure that the generation rate remains at an interval of 10 minutes per block, Satoshi Nakamoto embedded a feature into the protocol that adjusts the difficulty approximately every two weeks. If during this period, the fourth dimension between blocks falls below that marking, the difficulty adjusts upwards. If the fourth dimension between blocks rises above that number, the reverse occurs.
These two contempo adjustments came as a upshot of an immense increase in hashpower. Thus, instead of supporting the death screw scenario, it would announced to indicate the excellent health of the Bitcoin network.
Source: https://cointelegraph.com/news/is-a-bitcoin-death-spiral-imminent-following-yesterday-s-massive-difficulty-adjustment
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