The Bitcoin hash rate and mining difficulty dropped dramatically after the Chinese government shut down mining facilities in the nation.
The decrease in mining difficulty indicates that the network is experiencing less competition.
The next difficulty adjustment is predicted to be less harsh, despite the fact that the rate is unlikely to rebound considerably very soon.
Following China’s recent restriction on cryptocurrency mining, Bitcoin had the largest difficulty drop in history. On July 3, the mining difficulty for block 689,471 reduced by roughly 28%.
The processing power required to validate Bitcoin transactions is measured by the mining difficulty. Every two weeks, the network adjusts the difficulty level to reflect the degree of competition among miners. The drop in difficulty recently indicates that there is less competition.
The dramatic drop in mining difficulty resulted in lower transaction fees, which may have contributed to Bitcoin’s $1,000 price increase.
ByteTree Asset Management’s CIO, Charlie Morris, stated:
The lower difficulty adjustment, which was expected this morning, has resulted in a nice Bitcoin price movement. Fees had already dropped to $6 in the last hour, down from $10 the day before.
According to BTC.com, mining difficulty fell by 16 percent and 5% on May 29 and June 13, respectively. The most recent difficulty change is the third in a row, dating back to December 2018.
Due to the financial concerns that the new asset class poses, China declared in May that it would crack down on crypto mining and trading. Although the country’s prohibition on digital assets is not new, it reaffirms past positions on the hazards of virtual currencies to economic stability in light of recent volatility.
Previous bans on Bitcoin and other cryptocurrencies were solely intended to stop people from trading and transacting with them. China, on the other hand, has imposed a complete ban on digital assets this time.
After the government imposed a ban on mining activity, Bitcoin miners in China were ordered to shut down, accounting for an estimated 65 percent of the network’s hash rate.
For Chinese miners, cryptocurrency mining was a multibillion-dollar business. They’ve now resorted to relocating their business or selling mining equipment to overseas mining farms. Bitmain, the world’s largest mining rig manufacturer, has temporarily ceased sales since late June, when the cost of top-tier rigs fell by nearly 75%.
Despite the fact that Bitcoin’s price has dropped by half since Chinese miners were ordered to leave the country, the network is now less reliant on the government.
When Bitcoin undergoes another adjustment in two weeks, the decline in hash rate and drop in mining difficulty is projected to be less severe./n
