Mining Bitcoin could become much easier for active miners across the world from as soon as this weekend as the recent crackdown on digital currencies in China knocked out a large chunk of computing power used by the industry.
According to data from blockchain data firm Glassnode, the mean hashrate of Bitcoin, the amount of computing power dedicated to securing its blockchain network by solving complex mathematical equations to validate transactions (the ‘mining’ process), dropped to 94 exa hashes per second (EH/s) on Sunday, its lowest level since May 2020, as many Chinese miners went offline and some uprooted their hardware to set up shop in more favourable jurisdictions.
The dip in hashrate has also followed a slide in the price of Bitcoin in recent months as the Chinese crackdown alongside environmental concerns around energy used in the mining process have left many investors looking less favourably towards crypto.
As a result of the seismic shift in the Bitcoin mining landscape and the sheer amount of computing power currently offline, Glassnode estimated that the difficulty of mining the cryptocurrency could drop by 25% when the next adjustment occurs on July 3, meaning that miners that are still operational are “likely to become even more profitable over the coming weeks”.
Such beneficiaries could include the likes of Argo Blockchain, which has mining operations in Canada and the US. Meanwhile, North America in general could see a boom in mining activity as Chinese operations migrate into the region due to its much lower political risk.
The sharp drop in mining difficulty is also shaping up to be one of the biggest corrections in Bitcoin’s history and is unlikely to increase again the amount of computing power knocked offline by the Chinese crackdown either restarts or is replaced.
The exodus of miners from China, as well as a slide in the price of Bitcoin, followed an order earlier this month from The People’s Bank of China (PBOC) that all major financial bodies stop facilitating transactions in digital currency.
However, there are already signs that the now exiled Chinese miners are starting to resettle their operations elsewhere, with Canann Inc (NASDAQ:CAN), one of the world’s largest manufacturers of crypto mining machines, saying last week that it has set up a base of operations in neighbouring Kazakhstan.
Another China-based crypto firm, BIT Mining (NYSE:BTCM), has also shifted its operation into the Central Asian nation, saying previously that it has moved 320 mining machines out of China into Kazakhstan and expects to deliver another 2,600 before the start of July.
In late afternoon trading on Tuesday, Bitcoin was up 5.2% in the last 24 hours at US$36,309, giving it a market cap of around US$681bn.