miners were pushed to shut their shop. Adding more heat into the mix a professor of Santa Clara University, Atulya Sarin introduced the idea that the token has entered a death spiral and will be valued at $0 as a result.
Bitcoin Death Spiral
While several influencers objected the theory, dismissing the possibility of the phenomenon including. The author of Mastering Bitcoin, Andreas Antonopoulos elaborated in a Youtube session, the death spiral phenomenon and the reasons it is less likely to happen. Fundamentally, Bitcoin mining difficulty is calculated based in the blocks mined which imply that after every 2016 blocks are mined, resulting in the difficulty being adjusted every two weeks.
So, if there is a significant drop in the hash power with only half the miners participating than the resulting block will be issued every 20 minutes instead of every 10 minutes, prolonging the time taken to adjust the mining difficulty. In turn, the mining becomes less profitable and subsequently many miners quit. This loop continues and as the miners’ exit causes a further drop in the hash rate, which makes block issuance even slower, creating a death spiral.
The rise in mining difficulty
According to the latest reports, for the first time since October 2018, Bitcoin’s mining difficulty has increased. In fact, the rise has been in double digits, i.e., 10%.
The Twitterati has actively commenting on this recent activity, Alistair Milne, a Bitcoin evangelist said:
“Remember the Bitcoin mining death spiral FUD? Mining difficulty just adjusted +10%”
CryptoCoinMaker, a Twitterati said:
“Miners either have much cheaper electricity than I, or they think a bounce is coming”
Kirkins, another Twitterati said:
“Strange mining cost increased 10% despite bear market”