Bitcoin mining difficulty, which is the amount of computer power needed to validate transactions on the network, has fallen by 7% after the network’s latest readjustment.
This is the largest drop since November 8, 2018, Alistair Milne, chief investment officer at Altana Digital Currency Fund, has reported on his Twitter account.
Based on the available data, Alistair has concluded that on the current level of difficulty, it costs $8,000 to mine 1 bitcoin. As a result, the crypto's price must rise above that level so that mining the currency becomes a profitable activity.
The competition for block rewards is higher as a result of the increased difficulty, while miners participate more actively in the network when this parameter falls.
The network makes use of this mechanism to stabilize itself, ensuring this its security even when the price or activity of the network falls significantly.
Bitcoin mining has become more competitive in recent years after the arrival of ASIC miners and cheaper sources of electricity.
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