{"id":466243,"date":"2021-06-25T10:41:40","date_gmt":"2021-06-25T10:41:40","guid":{"rendered":"https:\/\/uniquehot.com\/?p=466243"},"modified":"2024-06-11T13:56:36","modified_gmt":"2024-06-11T13:56:36","slug":"bitcoin-hash-rate-goes-on-death-spiral-post-chinas-crackdown-on-miners","status":"publish","type":"post","link":"https:\/\/uniquehot.com\/news\/bitcoin-hash-rate-goes-on-death-spiral-post-chinas-crackdown-on-miners\/","title":{"rendered":"Bitcoin Hash Rate Goes On Death Spiral Post China\u2019s Crackdown On Miners"},"content":{"rendered":"

The great Bitcoin miners migration is well underway. And the network\u2019s total hash rate is showing it in a big way. Currently, the number of terahashes per second is at its lowest level in the last twelve months. That means that mining Bitcoin has not been easier in a whole year. Also, there\u2019s less competition. So, it\u2019s good news for all the other miners that are spread around the world. However, don\u2019t expect it to last long.<\/span><\/p>\n

Tons and tons of mining equipment are currently traveling to their new homes. There are reports of a huge operation in Kazhakstan, a neighboring nation of China. There are also rumors of equipment and personnel already settling down in Texas. The US state is <\/span>making a push<\/span><\/a> to become a Bitcoin mining capital, and apparently, the efforts already bore fruit.\u00a0<\/span><\/p>\n

Back in China, the crackdown is no longer a rumor. It\u2019s a reality. <\/span>CNBC<\/span><\/a> reports:<\/span><\/p>\n

China\u2019s crackdown intensified over the weekend, with authorities in the hydropower-rich Chinese province of Sichuan ordering crypto miners to shut down operations.<\/span><\/p>\n

According to reports, more than 90% of China\u2019s bitcoin mining capacity is estimated to be closed.\u00a0<\/span><\/p><\/blockquote>\n

Some experts see this as a good thing. It\u2019s estimated that China controlled between 60 and 70% of Bitcoin mining, and the future looks clearer with them out of the picture. The hash rate will suffer for a while, but there\u2019ll be more decentralization. Also, the carbon-powered-energy consumption FUD will decrease. Even though China\u2019s miners were mostly located in areas rich in renewable energy, Bitcoin critics had a hard time believing reports from that side of the world.\u00a0<\/span><\/p>\n

$\"\"$ <\/p>\n

Total Hash Rate (TH\/s) of the Bitcoin network | Source: Blockchain.com<\/a><\/pre>\nAnother China Ban, A Reflection Of 2017<\/span><\/h2>\nThis is not the first time that the Chinese government\u2019s cryptocurrency policy caused havoc on the market. In September 2017, they banned crypto exchanges altogether. Just before that, <\/span>Bitcoinist reported<\/span><\/a>:<\/span><\/p>\n
While Chinese exchanges used to represent over 90% of Bitcoin\u2019s trading volume, this changed completely with the intervention of the PBoC which led to the end of <\/span>margin trading<\/span> and <\/span>zero-fee<\/span> policies and to the temporary halt on withdrawals.<\/span><\/p>\n
All of these changes contributed to China\u2019s <\/span>trading volume reduction<\/span>, which saw its market share fall to 3-5% of the global trading volume.<\/span><\/p><\/blockquote>\n
So, historically, the Chinese government has shown no mercy in closing billion-dollar businesses by decree. It\u2019s also worth noting that most of the banned cryptocurrency exchanges just closed their China offices and moved their operation to other countries. They continue working to this day and, for users not in China, the traumatic move didn\u2019t affect their experience in the slightest. <\/span>Bitcoinist reports<\/span><\/a> again:<\/span><\/p>\n
The clampdown led to a staggering drop in CNY trading \u2014 which comprised over 90 percent at its peak \u2014 as traders made an exodus to over-the-counter, <\/span>peer-to-peer<\/span><\/a>, and foreign exchanges. As a result, jurisdictions with friendlier laws experienced a <\/span>boom in trading volume<\/span><\/a> as the market flipped on its head<\/span><\/p><\/blockquote>\n
The current situation with the miners is a reflection of that. The mining business is in the process of flipping on its head. The hash rate will recover.<\/span><\/p>\n
<\/p>\n
BTC price chart on Bitstamp | Source: BTC\/USD on TradingView.com<\/a><\/pre>\nThe Hash Rate Will Rise Again<\/span><\/h2>\nIn retrospect, we should\u2019ve seen it coming. Only two months ago, following a suspicious blackout, <\/span>NewsBTC reported<\/span><\/a>:<\/span><\/p>\n
According to the Beijing Economic and Information Bureau, there were concerns about the energy consumption related to these activities. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Special Committee of China, to claim that the <\/span>country\u2019s environmental requirements could lead to crypto mining being more \u201cstrictly regulated\u201d<\/span><\/a>. Jianing said this will be \u201cinevitable\u201d.<\/span><\/p><\/blockquote>\n
Related Reading | Bitcoin Mining In China To Usher Historic Moment, Will BTC Be Affected?<\/a><\/strong><\/em><\/p>\n
As for the possible reasons, Bitcoin Magazine\u2019s Lucas Nuzzi cites the upcoming Digital Yuan CBDC. He also defuses the FUD by informing us, \u201c<\/span>Daily Hash Rate is, by its very design, a volatile metric that is not suitable to track lasting changes in the mining landscape<\/span><\/i>.\u201d<\/span><\/p>\n
\n2\/ Yes, Hash Rate will drop and MSM will take advantage of it with sensationalist \u201cBTC Hashrate drops X%\u201d headlines. <\/p>\n
Should you be concerned?<\/p>\nNo. Daily Hash Rate is, by its very design, a volatile metric that is not suitable to track lasting changes in the mining landscape. pic.twitter.com\/v1Gvor1gXb<\/a><\/p>\n
— Lucas Nuzzi (@LucasNuzzi) June 21, 2021<\/a><\/p><\/blockquote>\n