By
Chimamanda U. Martha
April 25th, 2024
The 16% decrease in Bitcoin mining increased the average time it takes to produce a block to 11 minutes 55 seconds. Now miners are anticipating an even harder crackdown on Bitcoin mining and starting to move their operations.
Lately, the Chinese government has been intensifying its efforts on Bitcoin (BTC) mining crackdown. In particular, after Chinese Vice Premier Liu He called for a “crackdown on Bitcoin mining and trading behavior” to prevent the “transmission of individual risks to the social field”, the authorities imposed penalties for any crypto-related activity. As a result of the restrictions, Bitcoin mining difficulty declined by 16% on Sunday to 21 trillion. Notably, this is the sharpest decrease in 2021 so far.
Bitcoin mining difficulty is a measurement of the network’s security. It indicates how hard it is to find the right hash for each block and shows how much time is required to solve a complex cryptographic puzzle.
Chinese Efforts to Crack Down on Bitcoin Mining
Bitcoin mining is concentrated mostly in China. Over 75% of the miners that validate Bitcoin transactions are based there. This is due to the fact that China manufactures most of the world’s mining equipment. Besides, massive mining farms are taking advantage of extremely cheap electricity prices in the country. Bitcoin mining consumes around 112.57 terawatt-hours per year of energy, more than entire countries such as the Philippines and Chile. Therefore, the Chinese government is concerned about financial stability and focuses on the suspension of crypto-mining and other crypto-related activities.
For example, the biggest crypto miners with the world’s largest mining farms, HashCow and BTC.TOP, announced they would stop selling machines to clients in China. Besides, they stated they would refund anyone who already paid for a machine but did not receive it.
HashCow commented:
“We will actively support all kinds of laws and regulations in the country to avoid regulatory risks.”
As for BTC.TOP, the company even decided to move its mining services to North America. Its CEO Jiang Zhuoer said:
“Next, we will mainly mine in North America. It’s not worth running the regulatory risk.”
Recently, the Chinese government also added Bitcoin mining to a list of industries that need monitoring in order to protect the economy. China’s central bank digital currency (CBDC) backed by the yuan is also a part of the effort to ensure “a fair supply of digital currencies” and greater financial stability in the country.
The 16% decrease in Bitcoin mining increased the average time it takes to produce a block to 11 minutes 55 seconds. In comparison with May 13, when lock production required 8 minutes and 14 seconds, it is almost four minutes longer. Now miners are anticipating an even harder crackdown on Bitcoin mining and starting to move their operations.