Why does the Bitcoin security depend on miners directly?

In November 2018, there was a significant drop in the price of Bitcoin: from $ 6,000 to $ 3,000. As a result, this created an extremely harmful situation on the market, which affected not only the decrease in the popularity of the Bitcoin but also many critical internal factors:

• network hashrate fell by more than 40%
  
• network difficulty decreased by 30%
  
• miners profit decreased to payback level
  

This period was one of the most difficult for the entire crypto community because the price fell by 85% of the maximum values ​​of December 2017 ($ 20,000).

Understanding Bitcoin Hashrate and Mining Difficulty

Why are hashrate and network difficulty so important?

First, let's figure out what is a hashrate. A hashrate is the combined power of all mining devices that mine a particular coin. So, the higher this indicator, the harder it is to capture the network entirely.

Network difficulty is an indicator that determines how difficult it is to solve a mathematical task embedded in the Proof-of-Work algorithm to get a new block. Every 2016 blocks, the difficulty is recalculated either to a smaller or a larger side. The higher the complexity, the harder it is for the mining equipment to solve the problem.

Whoever solves the problem first will receive his portion of bitcoins (currently 12.5 bitcoins). Therefore, to increase the speed of solving the problem, miners additional equipment for production is installed, and competition between them is increasing. As a result, this contributes to an increase in network hashrate.

It turns out that the more miners and the higher hashrate, the more security the Bitcoin network.

Impact of Price Fluctuations on Network Security

As mentioned above, in November 2018, the price of Bitcoin fell to $ 3,000. As a result, production costs began to exceed profits from the sale of bitcoins. The price stayed in this range for more than a month and many miners, unable to withstand losses, began to turn off their equipment. The result was a hashrate reduction of 40%, which was the most significant drop in the history of bitcoin.

After that, the difficulty also decreased significantly, which led to a decrease in the time spent finding the block and mining bitcoins. Only large mining companies remained on the market and those miners who had cheaper or even free electricity. They were able to wait out the bad times and get even more bitcoins, while competitors were out of the market.

A little later, we saw the opposite picture:

• Bitcoin price started to rise
• it led to an increase in mining profitability
  
• the consequence was the return of miners
  
• as a result, the hashrate and bitcoin network difficulty has increased
  

At the moment, we see that the bitcoin hashrate surpassed the previous maximum by almost 50% and reached 80 EHashes per second, and the network difficulty exceeded the November maximums by 30%.

It turns out that both indicators have grown more than two times after the strongest drop in the network. Power continues to gain momentum, and all new devices are coming to the Bitcoin network, which allows it to increase its decentralization and security further.

Thus, it turns out that a new round of Bitcoin price growth provoked an increase in network security from a 51% attack.