Bitcoin went through a serious decline over the past weeks amid the spreading coronavirus and the financial turmoil that it’s causing. As such, the decreasing prices have pushed miners to switch off some of their equipment to reduce costs.
However, it’s situations like these that showcase the networks ingenuine design and its ability to self-sustain. One of the biggest Bitcoin mining difficulty adjustments is scheduled for March 25th and it should offset the decreasing profitability.
According to BTC.com, the next difficulty adjustment is estimated to take place on March 25th and it will reduce the difficulty with more than 10%. This is one of the biggest difficulty adjustments for the cryptocurrency and it showcases a few important qualities of the network.
First things first, it demonstrates the network’s ability to sustain itself. Despite economic hardships that may cause serious reductions in the price of Bitcoin as the one seen on March 13th, the network is designed to adapt to the changing conditions.
A reduction in the mining difficulty means that it would be easier for miners to complete their work and get rewarded. As such, it reflects directly on their profitability, making it more lucrative to mine Bitcoin.
Moreover, it’s also worth noting that this happens with absolutely no outside interference. Traditional markets are also suffering at the moment, but they receive tremendous assistance from governments, that are doing everything possible to reduce the bleeding. Bitcoin receives none of that and it still functions as intended.
From a business perspective, the upcoming reduction in mining difficulty comes with other implications as well.
According to Matt D’Souza, a common cryptocurrency commentator and portfolio manager, rewards that inefficient miners were receiving will get allocated to the miners that survive. This restores “healthy margins to the most efficient miners, which allows the system to survive and thrive. The Bitcoin network is about discipline and survivability.”
According to the expert, it is these principles exactly that “drive a sustainable financial system – no bailouts, no money printing, no irresponsible panic intervention.”