There has been much ado made recently over supposed seasonal mining fluctuations on the Bitcoin network.
The narrative goes that, as the rainy season in China comes to a halt around the August to October timeframe each year, cheap and abundant hydroelectricity dries up. This forces many inefficient late-model miners to shut off or move elsewhere to find more affordable, accessible energy — creating migratory or nomadic miners, if you will.
The narrative also claims that the network sees a significant drop in hash rate and difficulty at yearly intervals roughly matching this seasonal decline in Chinese hydroelectric generation. This certainly appears to be the case now, in fall 2020, as many speculate the recent loss of about 48 exahashes per second (Eh/s) (30 percent of the network’s total hash rate) is due to just this phenomenon. But does the data support this for other years?
And what about the recent Bitcoin difficulty adjustment at block height 655,200, one of the largest drops in Bitcoin’s history? Clark Moody’s dashboard shows the block difficulty experienced a 16 percent drop based on the aforementioned loss of network hash rate.
Bitcoin Block Production Rate, Difficulty Adjustment And Hash Rate
The Bitcoin protocol is finely tuned and optimized for certain predictable outcomes. The way the network arrives at these desired results is through a series of carefully designed system rules and guidelines that were crafted into the free and open-source software upon its creation.
The Bitcoin timechain is a series of blocks that verify, group and order transactions based on a preset series of rules. One such rule is the fact that blocks are added to the chain at a programmatic rate of approximately once every 10 minutes, six blocks per hour and about 144 per day.
Block difficulty is generally proportional to the amount of computational work miners need to generate to produce a block. The Bitcoin Genesis block had a difficulty of 1. Yesterday, the…