Bitcoin [BTC], the very first cryptocurrency with the largest market share, is shining brightly as the coin marks another milestone today. The coin has been in the spotlight since it reached its all-time high in the month of December 2017, drawing the attention of well-known influencers, institutions, and media across the globe. However, the coin faced criticism as the price of the biggest currency witnessed a downward trend throughout 2018.
At present, the coin is trading at its price range of 2017, before the bull rally that placed the coin’s valuation nearing a whopping $20,000. As the price continued to slump in 2018, there were several critics claiming that the cryptocurrency is going to enter a death spiral, taking into consideration the price of the cryptocurrency slumping below the mining cost. Additionally, the professor of Santa Clara University, Atulya Sarin stated that the coin will be valued at $0 as a result of the death spiral phenomenon.
This was soon followed by several influencers in the space dismissing the possibility of the phenomenon including Andreas Antonopoulos, the author of Mastering Bitcoin. In one of his Youtube sessions, the author had explained the death spiral phenomenon and the reasons it is less likely to happen.
According to the fundamentals, the Bitcoin mining difficulty is calculated based in the blocks mined, i.e., 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, then it would result in the blocks being issued every 20 minutes instead of every 10 minutes, prolonging the time taken to adjust the mining difficulty.
This, in turn, would result in mining becoming less profitable leading to several miners taking the exit route. However, the loop continues as the miners’ exit would cause a massive drop in the hash rate, thus resulting in an even slower block issuance, creating a death spiral.
Now, according to the latest report, Bitcoin’s mining difficulty has increased for the first time since October 2018. Additionally, the difficulty has seen a rise in double digits, i.e., 10%.
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”
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