While Chinese authorities were intensifying the Bitcoin (BTC) mining crackdown, some crypto experts believe this might be a blessing in disguise to this sector.
The Chinese administration recently massively disconnected BTC mining sites in Sichuan Province, triggering a price drop in the crypto market.
BTC mining expected to be more profitable
According to the announcement:
“Crypto experts say that, with more Bitcoin miners going offline due to China’s restrictions, other miners’ share of the network will increase, potentially making mining much more lucrative.”
Kevin Zhang, the vice president of crypto mining firm Foundry, added:
“As more hashrate falls off the network, the difficulty will adjust downwards, and the hashrate that remains active on the network will receive more for their proportional share of the mining rewards.”
Therefore, Bitcoin miners who remain active after post-China’s crackdown are anticipated to find it easier and more lucrative, given that once more miners away from the Bitcoin network, fewer computational guesses per second are needed to find the mathematical solution. As a result, the hash power will reduce, and Bitcoin’s network difficulty will go down.
Bitcoin’s hashrate slumps
According to Blockchain.com data, BTC’s hashrate nosedived from a record-high of 180.7 million terahashes per second hit in mid-May to approximately 116.2 million as of June 23.
The hashrate is used to measure the processing power of the BTC network. It allows computers to process and solve problems that would enable transactions to be approved and confirmed across the network.
Over 90% of BTC mining capacity was reportedly lost in China due to the Chinese authority intensified clampdown actions.
As a result, many miners migrated out of China to nearby countries to set up new mining facilities. BTC miners were forced to sell their holdings to get the needed capital to establish the necessary facilities.
Yet, it remains to be seen how this sector shapes up moving forward.
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