Bitcoin’s hashrate experienced a drawdown to an average of 105 EH/s as miners at Sichuan unplugged their rigs due to a Chinese regime crackdown.
This is the lowest level since early November 2020.
Bitcoin’s network hashrate, which is a measure of its computational horsepower, has dropped about 46% since its peak level in mid-May. According to data from Bitinfocharts. the average Bitcoin daily hashrate is currently 105 EH/s (quintillion hashes per second), a sizeable drawdown from its peak of 171.4 high posted some six weeks ago.
Figures from Bitinfocharts has reported a drop in mining profitability from a peak of $0.449 USD per day per terahash per second to current levels of $0.226 over the same period.
The last time Bitcoin’s hashrate crept below 90 EH/s was on November 3rd, 2020. While the hash rate is still increasing on a longer timeline, a trend-change in hashing power means less mining activity is required to validate new blocks and a temporary drop in bitcoin network security. Theoretically, this makes bitcoin more vulnerable to 51% attacks. In the grand scheme of things a drop in hashing power is temporary and network security is still very high, however.
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Chinese authorities cracked down on bitcoin mining facilities across the country over the weekend, with images of mining pools in China’s Sichuan province spreading across the internet and social media.
On June 18, authorities in Ya’an City, Sichuan, ordered local Bitcoin mining operations to shut down. In late 2019, CoinShares estimated that Sichuan hosted over half of global hash rate, attracting miners with its cheap and seasonally abundant hydro power.
On June 12, Yunnan provincial regime authorities alleged illegal use of electrical power by firms and individuals involved in bitcoin mining.
Miners decentralise out of China for good?
Per a CNBC report published on June 15, Castle Island Ventures partner Nic Carter noted Bitcoin’s hashrate was dropping, speculating: “it appears likely that installations are being turned off throughout the country.” In May, it emerged that Bitcoin’s hashing power was beginning to decentralise outside of China, rendering future crackdowns by the regime less impactful over time as the bitcoin network set up shop elsewhere.
Carter predicted that at least half of the entire Bitcoin hashrate will exit China over time.
The state of Texas has become one of the top destinations for what has been dubbed as the “great mining migration” due to favourable legislation and an excess of low-cost renewable energy.
A Cambridge University study reveals the extent of the mining exodus from China. In fact, in April 2020 China accounted for 65% of all bitcoin mining. By January 2021 that figure fell to 55% and continues to drop further still. At the same time, the US upped the mining game, capturing over 11% of global hashrate. These figures suggest that the bitcoin hashrate is decentralising out of China.
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