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| Bitcoin mining just got easier after China crackdown |
With China's use of cryptocurrencies, bitcoin mining could become easier and more profitable.
Last month, Beijing called for measures to combat bitcoin mining amid concerns about its environmental impact.
This has caused crypto miners to flee from China to other regions such as North America.
China intensified its crackdown over the weekend when authorities in hydropower-rich Sichuan Province demanded miners stop their operations.
It is reported that over 90% of the Bitcoin mining capacity in China has been shut down.
It is believed that 65-75% of global bitcoin mining takes place in China.
While this campaign is not good for Bitcoin miners in China, others can benefit from it.
What is bitcoin mining?
When you think of mining, the first thing that might come to mind is a pickaxe and shovel gold mine. But bitcoin mining is different from mining gold or other precious metals.
Computer networks around the world support digital currencies. In the case of Bitcoin, these computers rush to solve complex computational problems in order to make transactions.
This process also produces new bitcoins and, if successful, miners receive cryptocurrency rewards.
The miner’s reward is currently 6.25 BTC, which was previously 12.5 BTC. However, with the total token supply being limited to 21 million, the number of rewards for minors almost halves every four years.
It will be easier soon
After the campaign in Beijing, it appears that the total hashrate and computing power of the Bitcoin network have fallen sharply.
According to Blockchain.com data, the Bitcoin hash rate rose last month from a record high of 180.7 million terahahas per second (a measure of the speed of crypto miners) to around 101 million by mid-May.
Cryptocurrency experts claim that the percentage of other miners on the network will grow as more bitcoin miners stop working due to restrictions imposed by China, which could make mining more profitable.
As more hashes leave the network, the difficulty decreases and the hashes that remain active across the network due to their relative share of mining rewards increase.
Meanwhile, the difficulty of the Bitcoin network — a measure of how hard it is to mine Bitcoin — has fallen from a record high of more than $25 trillion in May to $19.9 trillion last week.
The mining difficulty is adjusted about every two weeks, so there is a data lag.
Using fewer online mining equipment reduces network difficulty. This has reduced competition from other bitcoin miners.
However, another important factor that determines miners’ profits is the price of the tokens. Due to negative comments from Tesla CEO Elon Musk and the shutdown of the industry in China, the price of the token has risen from all-time highs in recent months.
Since hitting a record high of nearly $65,000 in April, the value of the coin has almost halved.
The cryptocurrency also fell below $30,000, briefly erasing its gains in 2021, but has since fallen to more than $34,000.