Earlier this year, the Chinese government took the momentous step to ban any crypto mining operations based within its borders, causing a massive exodus of hashing power — 168 exa hashes per second (EH/s) to nearly 86 EH/s as of June 23, representing a drop of nearly 40% — from China to surrounding countries.
As a quick refresher, the hash rate refers to the total computational power needed to acquire a single Bitcoin (BTC). In other words, one can say that while central banks issue fiat currencies, miners are provided with new Bitcoin for solving pieces of complex mathematical code referred to as blocks.
Prior to the ban, China laid claim to 65% of the world’s total Bitcoin hashing power. Since the aforementioned move, however, a massive number of mining pool operators have packed up their suitcases and left for greener pastures. In one example, Canadian mining firm Bitfarms noted that its revenue had increased by nearly 30% quarter-over-quarter in Q2 2021, with the company mining 26% more BTC than it had done so in comparison to the previous quarter.
What’s happening exactly?
After a couple of months of turmoil, BTC’s hash rate levels now seem to have stabilized once again, with numbers seemingly returning to where they once were a few months ago. In this regard, data made available by crypto analytics firm CryptoQuant shows that the metric seems to have once again topped the 150 Exahashes mark at 152 EH/s, tripling the levels it had reached on June 28 (52 EH/s).
It is also worth mentioning that on May 13, Bitcoin’s average hash rate scaled up to an all-time high of 197.6 EH/s, only for the figure to slump by more than 65% as mining rigs across China were faced with the “great migration.” That said, with the metric now approaching early June levels, it is estimated that new all-time high values could be registered in the next couple of months.
Providing his thoughts on the matter, Kevin Zhang, vice president of business development at crypto mining firm Foundry, told Cointelegraph that despite the perceived recovery, things are still far from returning “back to normal,” adding that the 152 EH/s reading was based on a short 24-hour hash rate estimate window, where luck was high across the entire network and blocks were solved faster than expected, adding:
“Right now, the 24 hour moving average for hash rate is once again hovering around ~130EH/s, which is in line with its three- and seven-day moving averages. BTCs hash rate is certainly recovering and returning back to normal. However, a majority — if not all — of the large-scale miners in China that were displaced from the crackdowns have either shipped their mining fleets abroad or are warehousing them until they can find open hosting capacity.”
He further highlighted that, as things stand, the entire world is still constrained on readily available infrastructure that can support all of the displaced mining units to help maintain Bitcoin’s hash difficulty.
“It certainly is exciting to see hash rate come online and a lot of it is coming from new orders finally being delivered. By the end of the year, we very well could be setting new all-time-highs for network difficulty and hash rate”, Zhang closed out by saying.
Effects of China’s ban will linger
Philip Salter, chief technical officer for Bitcoin mining firm Genesis Digital Assets, told Cointelegraph that many Chinese miners have continued to hold out, hoping for an improvement of the situation inside China or possibly wait for an attractive opportunity to relocate overseas.
However, he added that most sizable mining sites have been bought up over the course of 2021, and there is simply no short-term capacity for deploying 5-8 gigawatts of mining hardware, basically implying that the situation hasn’t really reached any sort of tangible resolution just yet. Salter added:
“So, the situation isn’t over yet and I think we’ll be seeing the effects of China’s mining exodus for at least another year….
Read More: cointelegraph.com