Bitcoin mining is on track to fully recover from the most dramatic short-term disruption in the network’s history earlier this year, and miners are rewarded in the form of income.
In its fourth week of chain report, network analyst provider Glassnode reported that bitcoin hashtags have largely recovered despite shutting down 50% of the network’s hash capacity in May after China’s attack on the sector. The hash rate measures the total computing resources of a Proof of Work network.
Glassnode claims that both the hashing and mining speed challenges – which measure competition among miners seeking to solve the next block of the network – are on a “steady path to recovery”. Cointelegraph reported that the difficulty decreased by 28% in early July.
After rising 39% since the end of July, mining problems are almost back to levels of mass exodus from China, and further gains are expected this week. Glassnode also reported that the difficulty range showed the strongest reversal since December 2018.
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As noted by Chinese media Wu Blockchain, on October 5, Bitcoin difficulty increased by 4.71% at block high 703,584. This is the sixth consecutive increase since July 31.
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Although the block reward decreased by 50% from 12.5 BTC to 6.25 BTC as a result of the halving in May 2020, mining profitability has grown exponentially since then.
Glassnode notes that current mining profitability of $40 million has increased by 275% since the Bitcoin halving in May 2020, and is up about 630% compared to a drop of about $6-8 million in June 2020.
“Despite massive changes in the mining market, several major price adjustments and the halving drop in May 2020, the value of bitcoin rewards continues to rise, creating incentives for market adaptation, innovation, and recovery,” the report added.