The great migration of Bitcoin miners is in full swing. And the overall hash rate of the network shows this clearly. The number of terahashes per second is currently at its lowest level in the last twelve months. That means mining Bitcoin wasn’t easier in a full year. There is also less competition. This is good news for all the other miners scattered around the world. However, don’t expect it to last long.
Related reading | How China Bitcoin FUD Lowers the Cost of Making BTC
Tons of mining machines are currently traveling to their new home. There are reports of a huge operation in Kazhakstan, a neighboring state of China. There are also rumors that equipment and personnel have already settled in Texas. The US state is pushing to become a bitcoin mining capital, and it seems the efforts have already borne fruit.
Back in China, the crackdown is no longer a rumor. It is a reality. CNBC reports:
China’s crackdown intensified over the weekend when authorities in China’s hydropower-rich Sichuan province ordered crypto miners to cease operations.
According to reports, more than 90% of China’s bitcoin mining capacity is said to be closed.
Some experts see this as a good thing. It is estimated that China controlled between 60 and 70% of Bitcoin mining, and the future looks clearer when they are torn out of the picture. The hash rate will suffer for a while, but there will be more decentralization. The carbon-powered energy consumption FUD will also decrease. Although China’s miners were mostly based in renewable energy areas, Bitcoin critics found it hard to believe reports from this side of the world.
Total Hash Rate (TH/s) of the Bitcoin network | Source: Blockchain.com
Another China ban, a reflection of 2017
This is not the first time the Chinese government’s cryptocurrency policy has devastated the market. In September 2017, they banned crypto exchanges entirely. Shortly before, Bitcoinist reported:
While Chinese exchanges used to make up over 90% of Bitcoin’s trading volume, this changed completely with the intervention of the PBoC, which resulted in the end of margin trading and the zero-fee policy and the temporary stop of withdrawals.
All of these changes contributed to the reduction of China’s trade volume, causing its market share to drop to 3-5% of the global trade volume.
So in the past, the Chinese government has shown no mercy in closing billion dollar deals by decree. It’s also worth noting that most of the banned cryptocurrency exchanges have just closed their Chinese offices and moved their operations to other countries. They keep working to this day, and for users who are not in China, the traumatic move didn’t affect their experience in the least. Bitcoinist reports again:
The crackdown resulted in a staggering decline in CNY trading – which was over 90 percent at its peak – as traders migrated to over-the-counter, peer-to-peer and forex markets. As a result, jurisdictions with friendlier laws experienced a boom in trading volume as the market turned upside down
The current situation among miners reflects this. The mining business is about to be turned upside down. The hash rate will recover.
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
The hash rate will increase again
In retrospect, we should have seen it coming. Just two months ago, after a suspicious power outage, NewsBTC reported:
According to the Beijing Economic and Information Bureau, there have been concerns about energy consumption related to these activities. PengPai cited Yu Jianing, the rotating chairman of China’s Blockchain Special Committee, to claim that the country’s environmental regulations could lead to crypto mining being “more strictly regulated”. Jianing said it was “inevitable”.
Related reading | Will Bitcoin Mining Herald a Historic Moment in China, Will BTC Be Affected?
Lucas Nuzzi from Bitcoin Magazine names the upcoming Digital Yuan CBDC as possible reasons. He also defused the FUD by telling us: “Due to its design, the daily hash rate is a volatile metric that is not suitable for tracking permanent changes in the mining landscape.”
2 / Yes, the hash rate will go down and MSM will take advantage of this with sensational headlines “BTC Hashrate Drops X%”.
Should you be concerned?
No. Due to its design, the daily hash rate is a volatile metric that is not suitable for tracking permanent changes in the mining landscape. pic.twitter.com/v1Gvor1gXb
– Lucas Nuzzi (@LucasNuzzi) June 21, 2021
We should also consider Nic Carter’s claim that all of these things happen while “Bitcoin continues to maintain 100% uptime is nothing short of a modern wonder”.
Bitcoin’s hash rate transition, at which> 50% of its industrial base (resulting in annual sales of 15-20 billion
– nicolás carretero (@nic__carter) June 19, 2021
With Bitcoin, everything changes while everything stays the same. The hash rate will increase again.
Featured Image by OpenClipart-Vectors from Pixabay - Charts by TradingView and Blockchain.com