By
Godfrey Benjamin
April 16th, 2024
Amid strong regulatory action and the recent rout of Chinese miners, several mining rigs have gone offline thereby pushing the Bitcoin hashrate downwards. Analysts hope that the Bitcoin hashrate will recover once Chinese miners recover operations.
China’s heavy crackdown on local crypto mining operations caused several miners to unplug their rigs and withdraw operations. Some of the miners are also considering moving to overseas locations like North America and Europe. As this happens, the Bitcoin network hashrate has come crashing down significantly. BTC hashrate is the computational power required to mine new blocks and secure transactions. It turns out that the BTC hashrate has dropped to its lowest levels since November 2020.
This probably is the result of China’s crackdown on local crypto miners since China alone accounted for 65% of the total Bitcoin mining hashrate. As per data from Glassnode, the seven-day average hashrate for BTC has dropped to 129.1 million exahashes per second. This is a nearly 30% correction from the all-time high of 180.6 million exahashes per second in May last month. However, this is still up from 105.6 million a year ago.
Also, a higher hashrate is always beneficial for the network. This is because a higher hashrate means more resources devoted to processing transactions. The higher the hashrate, the greater is the blockchain’s resilience to attacks.
China’s Recent Crackdown on Crypto Mining Regions
Over the last few weeks, the Chinese authorities have forced local Bitcoin miners to shut down their operations. china’s most popular crypto mining destinations like the Inner Mongolia Autonomous Region, the Qinghai province, the Xinjiang Uygur Autonomous region all announced shutdown plans.
Regulators from the Yunnan and Sichuan provinces also stated that they would crackdown on illegal operations in the region. The outcome of this crackdown has been devastating for local players. For e.g. china’s top mining pool 1THash lost 70% of its value over the last week.
But analysts are confident that once Chinese miners relocate their operations, the BTC hashrate will surge north eventually. Zack Voell, content director at Compass Mining said:
“Zooming out, the size and rate of the latest decrease is consistent with other previous drops. After machines shuffle around the map and hash power relocates to new regions, the steady growth of Bitcoin’s hashrate should resume.”
Texas Attracts Chinese Miners
Amid the recent rout out of China, a large number of miners are shifting base to Texas. Texas is one region with the world’s lowest energy prices. Besides, amid the ongoing concerns with the environmental impact of Bitcoin, Texas also has the infrastructure ready for renewable energy consumption. Speaking to CNBC, Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini said:
“You are going to see a dramatic shift over the next few months. We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible.”
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