The difficulty decreases for the first time in three months. The possible reason is the expected drop in the bitcoin block reward subsidy pushing bitcoin miners out of the industry. 

As it seemed that bitcoin mining difficulty was going to cross the 200 billion threshold, it suddenly fell 1.6%, dropping from 199.3 to 196 billion. It has been on the increase since March 2015, growing by 25.8%.

The adjustment took place on 8 June, nearly a mоnth before the bitcoin block mining reward halving. With approximately 144 blocks generated per day and a total of 210,000 blocks to be mined before the next reward decrease, it is expected that the change will take place on 10 July, bringing mining reward down from 25 to 12.5 bitcoins. Technically, it means that the profit from bitcoin mining will drop 50% overnight.

It may cause serious problems for bitcoin miners who sell bitcoins to pay for their electricity and hardware costs. In the end of May, Sweden-based bitcoin mining company KnCMiner declаred bankruptcy, citing the expected reward halving as the main reason for its closure, together with the strength of the competition in the mining space. The decreasing number of miners in the bitcoin ecosystem is a plausible explanation for the decrease in the bitcoin mining difficulty.

The difficulty is adjusted every 2016 blocks, based on the average time it took to mine the previous block, which normally should equal 10 minutes. If the block is mined quicker, the difficulty increases; if it takes more time, it drops. The period between adjustments is about two weeks.

Its рrеvious dесrеasе, in March 2016, was caused by the bitcoin scaling crisis that caused a period of slowing transaction speed and rising fees in the bitcoin network. The crisis has been partly solved with the adoption of Segregated Witness by the Bitcoin Core.

Alexey Tereshchenko