For only the second time in Bitcoin history, the difficulty threshold for generating bitcoins adjusted to a smaller level.
Earlier today the level went from 76,194 to 68,979. The difficulty readjusts every 2,016 blocks and today this happened at block 114,912 – more than two weeks after the previous adjustment.
The lower number means that there was nearly 10% less mining activity over the last block adjustment period than the average during the previous one. The last prior decrease happened May 19, 2010 and that drop was an even lesser amount, percentage-wise – less than 8%.
Though the exact cause for this decrease is speculation, the contributing factors include:
A lower BTC/USD market exchange rate which lessened mining profitability. Depending on the cost of electicity, variable costs for generating a bitcoin on an efficient mining system currently run between fifteen to fifty percent of that bitcoin’s value.
Loss of (or a lesser participation by) our Mystery Miner.
Connectivity and performance problems with some public mining pools, including service issues related to attacks.
The total network stength appears to have started growing again, so this 10% drop in difficulty will not likely be enough to persuade a significant number of miners that had already withdrawn capacity to resume activity. Additionally, this week’s attention in the press has made Bitcoin catch the eye of an even wider audience than ever before.
Written on 25 Mar 2011.